Good morning,
GBP-EUR hit a two-year high yesterday reaching 1.2028. The UK reached a 30-year inflation high yesterday with CPI inflation reading 5.4% year-on-year for the month of December. Core CPI inflation read 4.2% smashing past the market’s prediction of 3.9%. On the back of these figures the Bank of England will likely be looking to raise interest rates to 0.5% in February. The market is currently pricing in a 90% chance of a February rate hike.
Yesterday we saw Bris Johnson announce the end of plan B COVID-19 measures here in the UK. This includes the end of compulsory face masks in public places for England and the recommendation that people should work from home has ended. Covid passes will not be mandatory in England, but venues could choose to enforce them if they feel it is necessary. All of these changes are based on the belief that the Omicron wave has now peaked.
We have a relatively busy day today on the economic calendar with Eurozone CPI inflation data due this morning with a level of 2.6% predicted year on year. Some way under the UKs 5.4%. From the US we have initial Jobless Claims which will give us a good idea on how the US labour market is performing.
Have a great day.
Josh Saunders, Senior Relationship Manager.
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References
https://www.poundsterlinglive.com/eur/16444-pound-to-euro-nudges-new-highs