Today's news headlines: 

‘UK’s recovery will lag behind other G7 nations, IMF forecasts’. The Coronavirus pandemic is expected to leave deeper scars in the UK than any other G7 nation, according to recent forecasts from the International Monetary Fund. The UK is unlikely to reach pre-pandemic levels of output anytime soon, with the economy predicted to be 3% smaller in 2024. This is mainly due to the prolonged cost of the pandemic, which has forced up taxes, detracting from spending on other areas such as healthcare. Pre-pandemic forecasts for the US, Canada, and Japan are all expected to beat expectations in 2024, with scars from government shutdowns likely to be short-lived. (Financial Times)

‘Sunak to apply tough “value for money” tests on gas bailouts’. Spiralling gas prices have pushed the UK government to formulate a strategy to combat the costs that are ultimately impending for consumers heading into the winter. The Treasury is expected to take a measured look at gas producers and whether companies have been operated well before the crisis began. Factors such as whether the company was hedged against rising prices, dividend, and bonus payments will all be considered to contain any knee-jerk reactions from the public. (Financial Times)

Today

Stocks were mostly mixed yesterday as the fresh forecasts from the IMF painted a less-than-ideal picture for the UK. The FTSE 100 closed 0.23% lower, while across the pond, the S&P 500 took a similar hit of 0.24%. Brent Crude is holding at $83 a barrel this morning as the rally in oil takes a breather. Major pairs are little changed this morning, with Cable continuing to return to the $1.3600 level while EUR/USD holds ground at $1.1550.

Events

Japan Core Machinery Orders m/m: -2.4% vs 0.9% last month
UK Construction Output m/m: -0.2% vs -1.0% last month
UK Gross Domestic Product m/m: 0.4% vs -0.1% last month
UK Industrial Production m/m: 0.8% vs 0.3% last month
US Consumer Price Index and Core CPI m/m: 1:30PM
Monetary Policy Committee member Jon Cunliffe speaks: 3:30PM
Federal Open Market Committee Meeting Minutes: 7:00PM
FOMC member Lael Brainard speaks: 9:30PM

Interbank rates:

GBP/USD – 1.3606
GBP/EUR – 1.1782
EUR/USD – 1.1548
USD/CAD – 1.2460

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