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It was case of "Nuclear power? Yes please" for the prime minister yesterday
The week started off with a steep dive for sterling against the euro. But just when you might have worried that it was a start of the great Budget unravelling, GBP recovered most of those losses.
And just as well, on a day with several pieces of good news for the UK economy.
The prime minister took to the stage defending the chancellor. But also in his speech the PM promised to implement the Fingleton Review in full. This is a new report on why Britain is the most expensive place to build nuclear power stations in the world and more generally on how to solve the UK’s inability to ‘get things done’. Starmer said he would implement the review in full to remove “pointless gold-plating, unnecessary red-tape, well-intentioned, but fundamentally misguided environmental regulations.”
Meanwhile, in the eurozone there were disappointing final results for the Purchasing Managers Index (PMI), with a downgrade on the early reports for November. German manufacturing PMI of 48.2 was the sharpest contraction since February. The USA’s was also 48.2, with anything under 50 denoting overall pessimism. The UK’s manufacturers on the other hand were in optimistic mood for the first time since October 2024 at 50.2.
Could a new rate cut be required in Europe? We’ll get the inflation result for the eurozone shortly – along with unemployment – with the ECB’s next rate decision now just two weeks away.
The dollar has been gradually weakening as the chance of a rate cut from the Federal Reserve next Wednesday has become a racing certainty.
With thoughts turning to Christmas, if you’re feeling priced out of gold right now and were thinking of silver gifts, well that also hit an all-time high yesterday, up 7% from Friday and twice the price of last year.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Slow start to the week
The chancellor made it through Monday without any more wheels falling off the Budget and the markets responded with a generally positive day for sterling. Coming up tomorrow we have the UK’s final Services PMI result.
GBP/USD past year
EUR: Euro weathers PMI downgrade
It was a sea of green for the single currency yesterday despite downgrades almost across the board for PMI. Will that survive the inflation and unemployment numbers this morning though? Pessimistic business leaders would suggest a rise in unemployment is imminent. We’ll hear from ECB president Christine Lagarde tomorrow.
GBP/EUR past year
USD: Choppy day for dollar
Despite some interesting movements midday as the markets came back from Thanksgiving weekend, most US dollar pairs ended up where they began the day. We’ve got more Services PMI out tomorrow, with predictions of a strongly positive outlook from US business.
USD/GBP past year
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