Today's news headlines:
'Britain avoids recession by narrowest margin during strikes'. UK GDP fell by 0.5% in December; however, the economy avoided falling into a technical recession despite a myriad of problems, such as strikes and a rampant cost of living crisis. The economy grew by 4% in 2022, lower than the 7.6% growth in 2021 as the country exited stringent Covid measures. It's no question that growth in the UK is stagnating, but the outlook is looking more hopeful than just a few months ago, as falling energy prices and a sense of confidence in government policy return a calm to markets. (Bloomberg)
'China's muted inflation gain leaves door open for rate cuts'. Consumer prices continue to creep higher in China, rising 2.1% in January this year from 1.8% in December. Analysts do not widely expect inflation to begin to spiral like in many economies around the world due to the government's ability to manage the price of items such as fuel using strategic reserves. This means that the People's Bank of China will likely continue to support the economy with ultra-loose monetary policy measures. In the last week, the central bank injected around $150bn into the financial markets to improve liquidity. (Bloomberg)
This morning, equities have fallen across the board as markets contemplate the prospect of further hikes from the Federal Reserve and the ECB as sovereign bonds sell off. The Japanese Yen has been boosted in early trading, with Kazuo Ueda named the next BOJ governor, seen by markets as a more hawkish appointment.
China CPI YoY (Jan): 2.1% (est. 2.2%)
UK GDP MoM (Dec): -0.5% (est. -0.3%)
UK Industrial Production MoM (Dec): 0.3% (est. -0.2%)
Canada Employment Change (Jan): 1:30PM
UK MPC Member Huw Pill speaks: 2:00PM
US Preliminary UoM Consumer Sentiment (Feb): 3:00PM
US Preliminary UoM Inflation Expectations (Feb): 3:00PM
US FOMC Member Christopher Waller speaks: 5:30PM
GBP/USD – 1.2123
GBP/EUR – 1.1291
EUR/USD – 1.0737
USD/CAD – 1.3424
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.