Today's news headlines:

‘UK mortgages set for slowest year since 2011 as house prices dip’. As interest rates rise in the UK, demand for housing looks set to fall in 2023. Current forecasts indicate that mortgage demand will increase by just 0.4% compared to 4.1% in 2022. With the demand side slowing, banks are also adjusting by tightening their credit lines, with analysts expecting defaults to rise in the coming months. Things are not dire yet as the UK economic outlook appears more upbeat than the end of last year, which is keeping the market afloat at the moment, according to EY. (Bloomberg) 

‘Balloon controversy threatens to deepen China stock losses’. Stocks in China retreated overnight as tensions between the US and China ramped up yet again following the appearance of a suspected spy balloon, spooking markets that President Biden would respond with economic sanctions. This has been a wake-up call for some as it is evident that geopolitical risks for China are still present and that the re-opening rally of the last two months may be overextended. (Bloomberg) 

Today

European shares followed Asia lower overnight, with US equity futures also in the red following a blowout print in the US jobs report on Friday suggesting the Federal Reserve has more room to hike. The Dollar is firmer this morning, with the DXY index up 30 basis points so far today. 

Events

Germany Factory Orders MoM (Dec): 3.2% (est. 2.1%) 
UK Construction PMI (Jan): 9:30AM
Eurozone Retail Sales MoM (Dec): 10:00AM
Canada Ivey PMI (Jan): 3:00PM
UK Monetary Policy Committee member Huw Pill Speaks: 5:00PM

Interbank rates*:

GBP/USD – 1.2065
GBP/EUR – 1.1184
EUR/USD – 1.0786
USD/CAD – 1.3412

Please contact your Dealer about any upcoming FX requirements you may have, or call +44 (0)20 3465 8200. 

*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.