Today's news headlines: 

‘UK hospitality industry yet to recover to pre-Covid trading levels’. Despite the easing of Covid restrictions in the summer, increased spending, and numerous tax breaks, the hospitality industry is still under pressure. Sales were up 73% in the third quarter of 2021 compared to the same time a year ago, however, output remains 10% away from pre-pandemic levels. Many in the industry were expecting a much stronger recovery, with UKHospitality suggesting the industry is in a very difficult position as labour and input costs soar. (Financial Times)

‘US dollar rises as inflation data revive bets of tighter monetary policy’. The US Dollar surged to a 16-month high against the Euro yesterday, as US inflation jumped to a 30-year high of 6.2%. The Pound also fell to its lowest levels since December 2020 as the markets priced in the likelihood of tighter monetary policy by the Federal Reserve. Market expectations have shifted; initially, the first interest rate hike in the US was forecast to be in 2023. With recent inflation developments, these projections have shifted to the middle of 2022, with tapering to be all wrapped up by June. (Financial Times) 

Today

UK markets managed gains yesterday despite a miss on Gross Domestic Product data; the FTSE 100 closed 0.6% higher. Asian markets ticked higher overnight as the Chinese property developer Evergrande rose almost 10% as it continues to avert default. Cable has moved higher in early trade, with the pair pushing towards the $1.34 level.

Events

German Wholesale Price Index m/m: 1.6% vs 0.8% last month
Switzerland Producer Price Index m/m: 0.6% vs 0.2% last month
Eurozone Industrial Production m/m: 10:00AM
Monetary Policy Committee member Jonathan Haskel speaks: 2:00PM
US JOLTs Job Openings: 3:00PM
US preliminary University of Michigan Consumer Sentiment: 3:00PM
Federal Open Market Committee member John Williams speaks: 5:10PM
US Treasury Currency Report: Tentative

Interbank rates:

GBP/USD – 1.3382
GBP/EUR – 1.1691
EUR/USD – 1.1445
USD/CAD – 1.2578

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.