Light at the end of the tunnel

Today's news headlines:

‘US inflation cools to lowest level since January’. Inflationary pressure on the Federal Reserve eased off yesterday as the closely watched US Consumer Price Index came in at 7.7% for the year leading up to October, marginally below economists’ expectations. Investors in the futures market took this as a sign that the central bank could opt for a lower interest rate hike at its next meeting in December, as yesterday’s data provided some hope that US inflation has started to pull back. Others are more sceptical and believe that since the US economy has contracted the last two consecutive quarters, a recession is not only likely but inevitable. (Financial Times)


‘Hunt plans post-election squeeze on spending with “Austerity 2.0”’. UK Chancellor Jeremy Hunt is considering a freeze in day-to-day public spending in real terms for the three years following 2025, saving the UK economy around £27 billion a year. This fresh wave of austerity is likely to hit public services even harder than former chancellor George Osborne’s public spending cuts in the wake of the 2008 Global Financial Crisis since public sector budgets are already severely under strain, not to mention battling with decades-high inflation levels. Think tanks predict that if health, education, defence, and international aid budgets are preserved, then other Whitehall departments could face budget cuts of up to 10%. (Financial Times)


Today

The UK has woken up to fresh recession evidence today as the Office for National Statistics revealed the economy contracted by 0.6% in September, a more significant fall than the 0.4% predicted by economists. The economy is now 0.2% smaller than it was before the pandemic in February 2020. US stocks enjoyed their strongest day in over two and a half years yesterday in the wake of the cooler-than-expected inflation data as the S&P 500 index gained 5.5% in a single trading session. Meanwhile, the tech-heavy Nasdaq Composite finished the day 7.4% higher. The positive tone is expected to continue into Friday. 

Events

EU Economic Forecasts: 10:00AM
MPC Member Jonathan Haskel speaks: 11:00AM
Prelim UoM Consumer Sentiment: 3:00PM
US, Canadian, and French Bank Holiday: All Day


Interbank rates*:

GBP/USD: 1.1725
GBP/EUR: 1.1455
EUR/USD: 1.0235
USD/CAD: 1.3305

 

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.