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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Pound hits three-year high, as reopening hopes lift travel and oil firms – as it happened

The skyline of the City of London
The skyline of the City of London Photograph: Victoria Jones/PA

Closing summary

Time for a recap

Optimism over the UK’s plans to re-open the economy have sent the pound to a three-year high today, and also driven up travel and property company shares.

Sterling hit $1.42 against the US dollar for the first time since April 2018, and also touched a one-year high of €1.17 against the euro.

Analysts said the UK’s rapid Covid-19 rollout was lifting the pound, alongside a wider move into riskier assets. Capital Economics predicted it could end the year at $1.45.

Shares in holiday firms continued to rebound, with TUI jumping 12% today and cruise operator Carnival gaining 10%. Jet engine maker Rolls-Royce finished the day 5% higher, with commercial property firms British Land (+3.7%) and Land Securities (+4%) also buoyant.

The oil price has surged to new 13-month highs, with Brent crude rising about $67 per barrel. Figures showed a sharp fall in US production last week, and a drop in distillate fuel reserves. This sent shares in BP up over 5% by the close of trading.

Bitcoin has recovered some ground after its slump on Monday and Tuesday. It’s currently trading just below $50,000, up 3.8%, after payments firm Square revealed it had bought more.

The Bank of England governor, Andrew Bailey, has accused the European Union of pursuing a “location policy”, as it puts pressure on banks to move activity from Britain to within the EU.

Bailey told the Treasury Committee that Brussels was wrong to make banks justify justify why they should not have to shift clearing of euro-denominated derivatives worth billions of euros from London to the EU.

“It would be very controversial in my view because legislating extra-territorially is controversial anyway and obviously of dubious legality, frankly.”

“And that would be very controversial, frankly.

Bailey’s US counterpart, Fed chair Jerome Powell, has again reassured Congress - and the markets - that monetary policy will remain loose for some time.

Powell told lawmakers that it may take more than three years to reach the Federal Reserve’s inflation goals.

Stocks pushed higher, with the Dow Jones industrial average hitting a fresh record high -- with investors also welcoming the prospect that Johnson & Johnson’s one-shot Covid vaccine could get emergency approval in the US soon.

In other news....

UK companies have warned that Brexit trade delays are worsening:

Heathrow airport has plunged to an annual £2bn loss in 2020, and it wants more government help in 2021:

The pandemic has also encouraged Lloyds Banking Group to reduce its office space by 20% over the next two years, as working from home becomes a permanent lifestyle change.

Investors are turning up the pressure on companies to improve ethnic and gender diversity on their boards ahead of the annual meeting season:

But there is some progress too -- the number of female directors at FTSE-100 firms has increased by 50% in the last five years, and women now hold more than a third of roles in the boardrooms of Britain’s top 350 companies.

Goodnight. GW

US stocks are also being lifted by the news that Johnson & Johnson’s one-shot coronavirus vaccine appeared safe and effective in trials.

That’s according to staff at America’s Food and Drug Administration, a move that paves the way for the vaccine’s emergency authorization in the US.

Dow Jones at new record

A Wall Street sign at the New York Stock Exchange (NYSE)

In New York, the Dow Jones industrial average has hit a new record high.

The Dow is now up 243 points, or 0.77%, at 31,780, as oil companies and travel firms rally. Another dovish performance from America’s central bank chief is helping too.

Energy stocks are surging, after the jump in crude prices to 13-month highs today. Chevron is up 3%, with chemicals company Dow Inc gaining 2.3%.

Aeroplane maker Boeing has jumped 5%, as hopes grow for a pick-up in travel as lockdown restrictions are lifted. Construction machinery maker Caterpillar, a bellwether of economic prospects, is 2.5% higher.

Stocks are being supported by Fed chair Jerome Powell, who has reiterated that the central bank will maintain low borrowing costs and keep stimulating the economy through its bond-purchase scheme.

Powell told Congress that there is still a great deal of slack in the economy, and that it could take more than three years to reach the Federal Reserve’s inflation goals.

Although the pound has dipped back from its three-year high of $1.42, analysts suspect it could push higher this year.

Capital Economics have raised their forecast for sterling’s value at the end of 2021, from $1.40 to $1.45.

That’s due to the falling risk of negative interest rates, the general rally in risk assets, and the UK’s Covid-19 vaccine rollouts.

Adam Hoyes, their assistant economist, says the vaccines have helped in two ways:

First, it could conceivably have encouraged more portfolio flows into the UK stock market given its sectoral composition – the UK has a high weighting of energy and financials, which have benefited most from the vaccine-induced rotation. And second, the UK’s vaccine rollout has been especially successful, improving the relative prospects for its economy.

The jump in the oil price has sent shares in BP (+5%) and Royal Dutch Shell (+3.5%) higher, to around the top of the FTSE 100 leaderboard.

The FTSE 100 is now up for the day, gaining 35 points or 0.5% in late trading to 6661, with the pound having slipped back.

Oil has surged to fresh 13-month highs, as new data shows the impact of the Texas winter storms on the sector.

US crude oil production fell by over 1 million barrels per day last week, the Energy Information Administration said on Wednesday, to 9.7 million bpd. That, Reuters says, equals the largest weekly fall ever.

Many Texan oil fields, and refineries, were forced to shut during the bitter weather last week - hitting production of crude, and also of refined products.

The storms also made it harder to import oil, at a time when demand was rising.

Separate figures have shown a large drop in stocks of distillate fuels such as diesel and fuel oils last week. The American Petroleum Institute reported that US stocks of distillate fuels fell by 4.5m last week.

The API report also showed a surprise rise in US crude stockpiles, up by 1m barrels against forecasts of a 5.2m barrel drop.

Brent crude has now jumped as high as $67.20 per barrel, up over 2.7% today, as traders anticipate it could take time for oil producers and refiners to reach pre-storm output levels.

Rishi Sunak has ruled out a rise in fuel duty after concluding that reliance on cars as a transport safety measure during the pandemic is still too great, Treasury sources have said.

The chancellor is understood to have seriously considered an increase before his previous budget last March, keen to send a signal about the UK government’s green agenda.

The Treasury also considered a rise of up to 5p a litre from March 2021 on the assumption that the UK would be back to somewhere near normal transport use.

“More people are still using cars as safer mode of transport,” a Treasury source said. “And there is a massive cost to electric vehicles at the moment – that feels like the priority to address.”

BoE's Andrew Bailey: EU pressure on bank is of 'dubious legality'

Bank of England governor Andrew Bailey has criticised efforts to make banks justify why they are not moving activities away from Britain and into the EU after Brexit.

Appearing before the Treasury Committee, Bailey argued that such attempts were of “dubious legality.”

Earlier this week, Reuters reported that Europe’s top banks are being asked to justify why they should not have to shift clearing of euro-denominated derivatives worth billions of euros from London to the EU.

Bailey told MPs:

“It would be very controversial in my view because legislating extra-territorially is controversial anyway and obviously of dubious legality, frankly.”

“And that would be very controversial, frankly. I think it would be a very serious escalation of the issue and I’m not going to obviously say how the government would react to that because that’s for the government to think about and we will work very closely with them on this but it would be a very serious escalation in my view of the issue.”

Updated

Tech stocks open lower but cruises shine

Over in New York, tech stocks are dipping again as some investors continue to rotate into ‘value’ stocks such as travel companies instead.

The Nasdaq index is down 0.85%, or 112 points, at 13,352, while the broad S&P 500 index has lost 0.3%.

Apple and Amazon have both dropped by 1.6%, with Microsoft down 1%.

But cruise operators are rallying, with Norwegian, Carnival and Royal Caribbean all up over 4% in early Wall Street trading.

Fawad Razaqzada, market analyst at ThinkMarkets, points out that the Nasdaq did recover a chunk of yesterday’s losses by the close of trading, after an early tumble:

The decline in tech stocks and rise in value stocks, along with the rallying copper and crude oil prices, suggested to me that investors were merely rotating into assets that are expected to do well in an improving economy. So, it was more of a rotation story than of stocks topping out.

And that’s how it proved to be as the latest dip was bought. That doesn’t mean things won’t turn ugly again, but Tuesday’s price action continues to show how insatiable the appetite for risk is at the moment. Still, valuations are sky-high for US equities and if and when major central banks start tapering talks, then we may see a sharp decline. So, investors should not be reckless or deceived by markets at extremely high levels.

FT: McKinsey’s Kevin Sneader ousted in leadership vote

The logo of consulting firm McKinsey + Company is seen in Zurich

Heads-up: The Financial Times are reporting that the head of McKinsey, global managing partner Kevin Sneader, has been ousted in a leadership vote at the consultancy.

That’s quite a shock, as management partners are usually re-elected for a second term.

It comes just weeks after McKinsey agreed to pay £419m to settle lawsuits across the US related to its role in America’s opioid epidemic, advising Purdue Pharma on how to sell more prescription opioid painkillers.

FT: McKinsey’s Kevin Sneader ousted in leadership vote.

Here’s a flavour:

McKinsey partners have voted to replace Kevin Sneader as global managing partner, in a historic rebuke over his handling of a succession of crises, according to two people with direct knowledge of the matter.

This means that the next head of the influential global consulting firm will be either Bob Sternfels or Sven Smit, the heads of McKinsey’s San Francisco and Amsterdam offices respectively, who have made it through to the last round of the leadership election.

Each of Sneader’s five predecessors served a second three-year term, with some serving three or four terms, so the 54-year-old Scot’s failure to get through to the second round shocked some insiders.

With inflation a big talking point today, here’s a neat chart showing how prices in the UK have changed over the centuries.

UK inflation
UK inflation Photograph: Kit Juckes of Societe Generale / Bank of England

It’s from Kit Juckes of French bank Société Générale, who points out that our understanding of inflation is still pretty flaky...and central bankers’ ability to control it may be overstates.

Juckes writes:

For example, while medieval plagues caused labour shortages and so inflation, the 40% CPI increase in the two years after the Black Death in 1349 still only caused average inflation over the 1350s as a whole, of 3 ½%. And the plague of 1666, was followed by falling prices for several years.

There were spikes in inflation due to South American silver and gold arriving in Europe, and due to wars (early 1700s, early 1800s, early 1900s), but the post WW2 inflation didn’t start as soon as rebuilding did. In the US, inflation averaged 2.2% in the 1950s and 60s and only picked up, along with everyone else, in the 1970s.

I think central bankers take too much of the credit for keeping inflation down in the last 20 years, but by the same token, I am not convinced that a post-pandemic economic recovery will lead to runaway inflation in the next few years, if it took 20 years of post-WW2 rebuilding to do so. The big dangers are still debt and falling asset prices, after a period of excessive asset price gains.

Brexit trade delays getting worse at UK border, survey finds

Freight trucks and HGVs boarding at the Port of Dover last month
Freight trucks and HGVs boarding at the Port of Dover last month Photograph: Ben Stansall/AFP/Getty Images

Nearly two months into the UK’s post-Brexit future, more companies are reporting trade delays.

And that could push up prices in the shops, and create stock shortages.

My colleague Lisa O’Carroll explains:

Delays importing and exporting goods to and from the EU have worsened since Brexit was introduced at the start of the year and will result in stock shortages and price rises for consumers, according to a report.

A survey of 350 supply chain managers found that two out of three had experienced delays of “at least two to three days” getting goods into the UK, compared with 38% who reported delays in a similar survey in January.

A third of this group said the delays were “significantly longer” than in January, 28% said “slightly longer” and 15% reported delays of a similar length to January. Just 18% of those surveyed by the Chartered Institute of Procurement and Supply (CIPS) said they experienced no delays or fewer delays.

Over in the US, mortgage applications have fallen by over 11% - due to rising borrowing costs and the winter storm in Texas.

Total mortgage application volume fell 11.4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

It cites a pick-up in mortgage rates, which have risen for much of the last two months -- tracking the rise in government bond yields as investors have anticipated a pick-up in inflation.

The severe winter weather also hit the market -- causing a 40% drop in purchase and refinance applications in Texas last week, as Texans were hit by power outages.

Updated

After a wobble yesterday, oil has resumed its upward march today.

Brent crude has gained 1.2% to over $66 per barrel, approaching the 13-month highs set earlier this week, while US crude is up 1% at $62.30 per barrel.

Asset price moves, 24 February 2021
Asset price moves, 24 February 2021 Photograph: XM

Other ‘riskier assets’ are also in demand today, at the expense of safe-haven options such as the US dollar.

Investors seem to be reassured by yesterday’s testimony by Federal Reserve chair Jerome Powell, who signalled that the central bank won’t relax its strong support of the US economy soon.

Raffi Boyadjian, senior investment analyst at XM, explains:

Growing optimism about a vaccine-led recovery continued to reverberate through currency markets on Wednesday, steering riskier pairs to fresh highs, while pummelling traditional safe havens such as the yen and Swiss franc. The latest wave of positive outburst comes on the back of soothing words by Fed chief Jerome Powell.

Speaking at his semi-annual Congressional testimony on Tuesday, Powell reiterated that the economy is “a long way from our employment and inflation goals”, adding that it will take “some time” to achieve substantial progress towards those goals.

However, whilst maintaining a dovish guidance, Powell did not appear to aggressively push back on the recent jump in long-dated Treasury yields, calling it “a statement of confidence on the part of markets” about the recovery.

His remarks underscored the view that easy money will keep flowing at least for the rest of this year even as the global vaccination campaign gathers pace and an end to the pandemic moves within sight. The improving recovery prospects combined with a pledge to keep monetary policy accommodative for as long as needed have sapped demand for safe havens, with the Japanese yen and Swiss franc being one of the biggest losers.

Bitcoin bounces after Square buys $170m more

After tumbling yesterday, bitcoin has bounced back over the $50,000 mark today - a gain of around 5%.

That’s quite a recovery, given it fell below $45,000 at one stage on Tuesday, but still leaves bitcoin shy of last weekend’s record high of $58,445.

Bitcoin’s bounces comes after Square, the payments business run by Twitter cofounder Jack Dorsey, revealed it has invested another $170m in the cryptocurrency.

That move could bolster claims that corporates will decide they need to hold some crypro assets...

...on the other hand, this week’s volatility might put off some finance chiefs.

Bitcoin since last weekend
Bitcoin since last weekend Photograph: Refinitiv

As Saxo Bank put it:

Crypto asset promoters may fear after that institutional interest will remain somewhat constrained after the kind of volatility we have seen over the last couple of days, because risk managers can’t allow excessive VaR [Value at Risk] swings.

Ethereum volatility was even more pronounced as it was down more than 20% intraday before a strong bounce set in.

Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, is more upbeat:

“Bitcoin has rebounded from yesterday’s sell-off, with both retail and institutional investors using the falls in prices to add to their positions.

“Jark Dorsey’s Square was one particularly notable backer. The payments company stated it had invested $170m more in bitcoin. With yet more endorsements from leading figures in the world of finance and technology, the direction of travel longer-term is clear - bitcoin and its peers are here to stay and are getting more integrated in our lives. This bodes well for future prices.

“Bouts of volatility impact all asset classes but investors must focus on the long-term. It’s likely we’ll see similar events in the future for bitcoin and other cryptoassets like ethereum, which also saw its price rebound sharply overnight. The key for investors is to focus on their financial goals rather than overreact to short-term moves in markets.”

The pound has now risen by over 3% against the dollar so far this month (it started February at around $1.37).

It’s gained nearly 6% over the last three months - helped by vaccine optimism and the avoidance of a no-deal Brexit.

The pound vs the US dollar over the last three months
The pound vs the US dollar over the last three months Photograph: Refinitiv

The strategy team at Saxo Bank say sterling’s rally is impressive, as it has powered on “almost regardless of the backdrop”

They explain:

[It has been] unswayed by rather notable swings in risk sentiment and even commodities, which the UK imports to a significant extent.

The $1.40 level merely provided a small hitch in the upward move, where there is no major resistance until the post-Brexit high around $1.4375.

They also expect next week’s budget will keep “more generous stimulus flowing to the economy”, as it will focus on protecting and creating jobs.

Travel stocks enjoying another day in the sun

Folegandros Island, in the Cyclades, Greece
Folegandros Island, in the Cyclades, Greece Photograph: vivoo/Alamy

Shares in travel companies are pushing higher, as City traders anticipate brighter times for these troubled sectors in 2021.

Airline group IAG is now the top FTSE 100 riser, up 3.5%, following a surge in holiday bookings after the UK lockdown exit plan was laid out on Monday.

Cruise operator Carnival has jumped near to the top of the smaller FTSE 250 index, up 5.8%, followed by package holiday firm TUI (+5.4%) and budget airline easyJet (+4%).

Retailers are also rallying, with electrical goods firm Dixons Carphone up 5% and Pets At Home gaining 4.5%.

They’ve lifted the FTSE 250 index by over 1% this morning.

Russ Mould, investment director at AJ Bell, says:

Travel stocks enjoyed another day in the sun with the likes of EasyJet and International Consolidated Airlines flying higher on reports of strong holiday bookings following England’s roadmap to coming out of lockdown.”

Commercial property firms are also in demand, with Land Securities up 2%, British Land gaining 1.8%, and smaller Hammerson jumping nearly 6%. They’ve all been badly hit by the crisis in UK retail, and falling demand for office space as firms embrace home working.

Housebuilder Barratt Developments (+2%) is also up, following a report that chancellor Rishi Sunak will extend the current stamp duty holiday beyond the end of March.

Updated

Germany’s stock market is leading Europe higher this morning, after the latest GDP report showed stronger growth in the eurozone’s largest economy.

The DAX index is up 0.6%, helping to lift the wider Stoxx 600 index by 0.2%.

European stock markets, 24 February 2021

The pound is still trading around its best levels against the US dollar in almost three years.

Although sterling has dipped slightly, it’s still up over half a cent this morning at $1.4175.

Conner Campbell of SpreadEx says there’s something of a delayed reaction to Boris Johnson’s four-stage unlocking plan:

While it failed to react much to the announcement at the start of the week, the idea that the UK could be back to ‘normal’ by the summer seems to have finally sunk in for sterling.

Heathrow calls for more Covid support after £2bn loss

Heathrow is understandably itching for travel curbs to end in time for the summer holidays.

It is calling on the government for more help -- including 100% business rates relief and a further extension of the furlough scheme -- after tumbling into the red last year.

My colleague Joanna Partridge explains:

Heathrow airport plunged to an annual £2bn loss in 2020 as the pandemic closed borders and the government restricted most international travel, underlining the impact of Covid-19 on aviation.

Britain’s largest airport said the number of passengers who passed through slumped to 22.1 million last year, more than half of whom travelled in January and February, a fall of 73% compared with a year earlier and the smallest annual total since 1975.

Cargo volumes also fell by 28% during 2020, although some dedicated cargo flights helped the airport to offset some of the lost passenger travel.

However, Heathrow’s chief executive, John Holland-Kaye, said he thought it was “very likely” that people would be able to go on summer holidays, following the prime minister’s plan to allow international travel to resume from 17 May, as part of the government’s roadmap out of lockdown.

Holland-Kaye told BBC Radio 4’s Today programme.

“For the aviation sector we can start to plan ahead for 17 May to make sure we’ve got the people and the planes in place so that we can not just get people on their holidays but also get British businesses moving again.”

More here:

Reckitt Benckiser cleaning product: Vanish, Finish, Dettol and Harpic.
Reckitt Benckiser cleaning product: Vanish, Finish, Dettol and Harpic. Photograph: Stephen Hird/Reuters

Consumer goods giant Reckitt Benckiser has seen a surge in demand for its hygiene and cleaning products in the face of Covid-19.

Like-for-like sales across the company surged 11.8% last year (which Reuters flags is its largest increase since RB was formed in 1999).

Hygiene product sales surged 19.5%, due to strong sales of Lysol (spray cleaners and disinfectant wipes) and dishwasher detergent brand Finish (probably because the dirty dishes have been piling up during the lockdown...).

Reckitt told the City that:

The pandemic has heightened the societal importance of hygiene and driving demand for our category-leading disinfectant products such as Lysol and Dettol.

New consumer behaviours are becoming engrained, with health professionals continuing to advocate improved hygiene measures as the ‘first line of defence’. While vaccines begin to offer protection from existing forms of the virus, concern remains that new variants will need a sustained high level of hygiene to ensure control

Shares in Reckitt are up 1.6% this morning.

A cash machine at a Lloyds Bank branch in central London.
A cash machine at a Lloyds Bank branch in central London. Photograph: Paul Hackett/Reuters

Profits at Lloyds Banking Group have plunged 72% after the bank was forced to put aside more than £4bn to protect itself from a potential jump in defaults linked to the Covid crisis.

Lloyds, which also runs the Halifax and Bank of Scotland brands, reported pre-tax profits of £1.2bn for 2020, down from £4.4bn a year earlier. However, that is higher than the £905m analysts had forecast.

The drop was down to a surge in provisions for losses linked to loans that will not be repaid. The bank set aside £4.2bn to cover the potential defaults, compared with £1.3bn in 2019.

More here:

Travel companies are benefitting from the prospect that vaccine rollouts will unleash a burst of pent-up spending.

TUI (+3.5%) are among the risers on the FTSE 250 index of mid-size companies, along with cruise operator Carnival (+3.2%).

British Airways parent company IAG are up 1%.

Retail stocks are also in demand, with Frasers (the company behind Sports Direct) up 2.6% this morning and bakery chain Greggs gaining 3.3%.

In the City, the FTSE 100 index of blue-chip shares is down a little in early trading, as the rising pound weighs on multinationals.

The FTSE 100 is down 25 points, or 0.4%, at 6600 points.

Pharmaceuticals group AstraZeneca (-1.3%) and consumer goods giant Unilever (-1%), are among the fallers (a stronger sterling makes their overseas earnings less valuable)

German Q4 growth revised up

We also have confirmation that Germany’s economy avoided a double-dip recession.

German GDP grew by 0.3% in the final quarter of 2020, new official figures show, up from a previous estimate of 0.1% growth.

Construction activity, industrial output and exports all helped Germany’s economy to grow in October-December, and avoid falling into contraction during the second lockdown last winter.

But....the current lockdown means Germany’s economy is likely to shrink in the current quarter.

Carsten Brzeski of ING explains:

In sum, the construction sector, industrial activity and foreign demand helped to stop the German economy from falling into contraction during the second lockdown

The downside to these factors, however, is that it is very unlikely they will again prove to be strong insurance against contraction in the fourth quarter. Instead, the stricter lockdown measures since mid-December, the harsh winter weather in February, a reversal of any pre-Brexit hoarding in the UK and weaker foreign demand at least from other eurozone countries have increased the risk of an unwelcome rotation. The growth drivers of the fourth quarter could easily become drags in the first.

Introduction: Pound hits $1.42 as rally continues

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The pound has hit a new three-year high against the US dollar, amid optimism about the UK’s economic prospects as the country prepares to start reopening from the pandemic lockdown.

Sterling hit $1.42 this morning, for the first time since April 2018, as traders continue to drive the pound up on the foreign exchanges.

The pound vs the US dollar over the last five years
The pound vs the US dollar over the last five years Photograph: Refinitiv

The pound also rallied against the euro overnight, hitting €1.17 for the first time in a year.

With Covid-19 cases continuing to fall, and Britain’s vaccine programme outpacing Europe, there is optimism that the UK could have relatively strong 2021.

Under the government’s four-stage plan, non-essential retail could open on 12 April, along with outdoor restaurant tables and beer gardens

Indoor venues such as the inside of pubs and restaurants, hotels and B&Bs, play centres, cinemas, museums and group exercise classes could reopen on 1 7 May.

As Michael Hewson of CMC Markets explains, if growth picks up, it would remove the need for negative interest rates to stimulate the economy:

The pound has continued its advance to multiyear highs against the US dollar, as markets take the not unreasonable view, barring some serious missteps from the government, that the UK economy will probably be one of the first major economies to start to ease restrictions in the coming weeks.

The whole debate over negative rates, which has taken up so much time over the past couple of years seems somewhat moot right now, with some market participants now hedging themselves against the prospect that the Bank of England’s next move may well be a rate rise. Who saw that coming?

Yesterday we learned that UK unemployment has hit a near five-year high, but also that wages are growing strongly (grimly, this is partly because more low-paid workers have lost their jobs in the last year).

Ipek Ozkardeskaya, senior analyst at Swissquote, explains:

British employment plunged 114K in the three months to December, but the average earnings excluding bonuses rose 4.1% in December from 3.6% printed a month earlier and the jobless claims in January fell 20K versus an additional 35K expected by analysts.

The idea that improved wages would translate into a faster inflation and refrain the Bank of England (BoE) from pulling out the negative rate weapon revived the GBP-bulls, although the strong appreciation in sterling should neutralize a part of the consumer price pressure in the coming months.

Equity markets, through, look less perky today as investors continue to worry about the prospect that rising inflation forces central bankers to tighten policy.

Yesterday, Fed Reserve chair Jerome Powell warned that the US economic recovery “remains uneven and far from complete”, a hint that the Fed won’t stop trying to stimulate growth and job creation

But still, European stock markets are on track for a lower open, after a choppy day on Wall Street yesterday that saw tech stocks under pressure.

The agenda

  • Noon: Weekly US mortgage applications
  • 2.30pm BST: Bank of England governor Andrew Bailey testifies to Treasury Committee
  • 3pm BST: US Federal Reserve chief Jerome Powell testifies to Congress again

Updated

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