Ofgem announces price cap increase
Today's news headlines:
‘UK energy regulator increases price cap by 80%’. This morning, UK electricity and gas markets regulator Ofgem announced that the average UK household energy bill will increase from a little under £2000 to £3549 per year. The Office of Electricity and Gas Markets has said that the 80% rise in the price cap was the result of the increasing wholesale energy costs as Russia throttles the gas supply to Europe, and countries are forced to find alternative sources ahead of winter. The Chief Executive of Ofgem has said that the government support scheme, which will see £400 provided to every household to mitigate rising energy costs, would no longer be sufficient as the latest forecasts predict the price cap could rise to over £6000 per year by next spring. (Financial Times)
‘Markets bet UK interest rates will hit 4% by May’. Financial markets are anticipating England’s central bank to raise interest rates to 2.75% by the time its November meeting rolls around, with a further hike to 4% in May next year. This change in market prediction has been fueled by recent increases in inflation forecasts as well as soaring energy costs while we've consequently seen the yield on two-year government bonds—which typically indicate the next 24-month interest rate average—trade at almost 3%. (Financial Times)
Asian stock markets rose along with US stocks overnight as investors anticipate that Jerome Powell’s speech at Jackson Hole later will hint at more interest rate hikes from the Fed. The Pound and Euro receded against the Greenback last night, with the Euro trading consistently below parity at 0.9970. Brent oil remains steady for now at just over $100 per barrel.
Japanese Tokyo Core CPI y/y: 2.6% vs 2.3% previously
German GfK Consumer Climate: -36.5 vs -30.9 previously
US Core PCE Price Index m/m: 1:30PM
US Personal Income m/m and Personal Spending m/m: 1:30PM
US Federal Reserve Chair Jerome Powell speaks: 3:00PM
US Revised UoM Consumer Sentiment: 3:00PM
Jackson Hole Symposium: Day 2
GBP/USD – 1.1700
GBP/EUR – 1.1840
EUR/USD – 0.9970
GBP/CAD – 1.2945
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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.