The pound has retained its strength against the euro but is still weaker against the dollar this morning.
Recession fears continue to weigh on the euro as gas prices surge, Europe’s energy crisis continues, and stagflation worries increase. The dollar, meanwhile, is benefitting from these concerns as the world’s reserve currency.
Several European Central Bank and Federal Reserve officials are due to speak throughout the course of the day and the markets will be listening for any comments on the state of the economy, interest rates and monetary policy.
In political news, reports this morning reveal that Nadhim Zahawi, who was appointed as Chancellor just two days ago, has told Boris Johnson that he must “go now”. Boris Johnson has since agreed to stand down and a formal announcement is expected imminently.
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GBP: UK house prices increase in June
The pound is stronger against the euro this morning but still trading around low levels against the dollar. Sterling is benefitting from concerns over the health of the eurozone economy, which are weighing on the euro.
Data released this morning showed that, despite the cost-of-living crisis, house prices increased by 1.8% in June. This has taken the average price of a UK house to £295,000. Prices jumped by 13% annually, the fastest since 2004.
However, experts say that house price growth will slow as the cost-of-living crisis continues.
GBP/USD past year
EUR: Recession worries weigh on euro
The euro is weak against both the pound and the dollar as recession fears continue to weigh on the single currency.
Surging gas prices, the ongoing energy crisis and high inflation are all weighing on the euro. Industrial production figures for Germany were released this morning, showing a 0.2% growth in May and falling below market forecasts. Supply chain constraints continue to weigh on production.
Today, there will be speeches from two European Central Bank officials ahead of a speech from ECB President, Christine Lagarde, tomorrow.
USD: Dollar’s winning streak continues
The dollar continues to show strength across the board, as it benefits from its status as a safe haven currency.
The minutes from the Federal Reserve’s latest meeting were released yesterday, showing that officials are retaining their hawkish stance towards monetary policy. The markets are now pricing in an interest rate hike of 75 basis points this month.
Today, employment figures will be released for the US, which could give an indication of how non-farm payrolls will fare when the data for June is published tomorrow.