Good morning,
The euro continued to hold its ground throughout trading on Tuesday and into Wednesday morning, as the single currency remains buoyed on the news of a deal being agreed between France and Germany for fiscal stimulus. Since the outbreak of Covid-19 within the continent, leaders have been at a stalemate as to move forward in helping the countries worst affected. Albeit in the early stages, with this news, it is expected that Europe will be united under the umbrella as one.
The big headline from the UK is that inflation has dropped to the lowest level since August 2016, now standing at 0.8%. The main tipping point for the inflation reading was backed by the drop in prices at the petrol pump for the UK consumer. With the global sell-off of oil, where future prices recently dropped to below $0, prices were passed on, so petrol and diesel also fell with it. This, in turn, also made energy bills cheaper too. The Bank of England now has the issue whereby the economy is still showing signs of slowing, despite the big stimulus plan put in place.
Normally the inflation rate is set at a healthy 2%. The market will continue to have the looming cloud of potentially negative interest rates unless the economy can get back to functioning normally. With Britons currently in lockdown and not in pubs, restaurants and shops, the flow of money is slowing meaning further stimulus may be required.
Have a good day,
Author: Jack Nicholls, Relationship Manager
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