Sterling and the euro rose to fresh one-week highs on Friday, buoyed by the Bank of England's moves to calm markets and hawkish signals from the European Central Bank. The British currency was headed for its best week against the U.S. dollar in 2 1/2 years as the BoE waded into the debt market to buy gilts for a second day on Thursday, buoying UK yields. Heated German and Dutch consumer inflation data also served as a reminder that the job of the ECB, BoE and other central banks is not done, with the figure for the wider 19-country euro zone due later on Friday.
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That puts the UK currency on course for its best week in 2 1/2 years. The euro also jumped to a one-week peak after a heated German inflation reading reinforced expectations for more aggressive policy action from the European Central Bank (ECB).
Some 55% of respondents expect to raise their prices in the coming year amid the sharpest cost of living crisis in a century, while just 9% of businesses are looking to increase salaries by 5% in the next 12 months
The scale of tax cuts and weak economic outlook will mean that the government is likely to need to announce fiscal tightening of between £37bn to £47bn in order for debt to be falling by 2026-27.
Local authorities and social housing providers will be able to submit bids for funding and will deliver upgrades from early next year until March 2025.
Britain's pound is still 18% above its "fair value" and the euro 11.6% above its fair value despite the sharp falls seen by both currencies this year, the Institute of International Finance estimated on Thursday. "Although the Euro and the British Pound have already fallen substantially, we estimate that they will need to fall further in order to converge to their new fair values," the IIF's Robin Brooks said commenting on its latest FX fair value estimates.
The Swiss franc is breaking records against the euro, giving the Swiss economy a temporary boost as central banks battle inflation -- although experts remain cautious about the months ahead.
Sterling and the euro fell on Thursday as Prime Minister Liz Truss defended her government tax-cutting budget, while relief at the Bank of England's intervention in bond markets faded. Investors also awaited German inflation data. The British currency jumped the most since mid-June on Wednesday after the BoE announced an emergency bond-buying plan to shore up a gilt market that had been in freefall with the pound.
Euro zone government bond yields rose on Thursday, unwinding most of the previous day's gains, after German inflation data reignited investor concerns over yet more interest-rates rises. Meanwhile, UK bond holders resumed their selling of gilts after the Bank of England (BoE) stepped in on Wednesday to stabilise the market in light of a surge in yields. Euro area yields fell sharply, echoing the strength in the gilt market, after the BoE's decision to launch of an emergency bond-buying programme gave fixed income investors some relief from what has been an otherwise relentless drop in prices this year.
H&M said that the strength of the dollar is making clothes more expensive to source, while the industry continues to battle declining footfall.
Trading volumes between the British pound and bitcoin have skyrocketed this week.
Cross-party lawmakers cited worries over data privacy and taxation as they demanded a U-turn on the controversial European Central Bank decision to let Amazon participate in the digital euro project.
The fashion retailer trimmed its full-year forecast as it warned Britain is facing two cost of living crises.