By Lauren Buckner
Sadly we start with the news that Queen Elizabeth II passed away yesterday afternoon after 70 years at the helm of the United Kingdom and as Head of the Commonwealth. Currency markets did little in response perhaps given her age and recent withdrawal from several public engagements. It’s also common knowledge that there has been a plan for several years perhaps even decades for such an event. It seems fitting to comment that she was a humble and devoted leader.
Our new PM’s ‘big’ announcements on tackling the cost of living crisis has been rather overshadowed but is significant. Capping the price that energy suppliers can charge for each unit of energy will bring welcome relief to many however, with the average household bill still sitting around £2500 per annum there are many who simply won’t be able to afford to heat their homes through winter.
Funded by government borrowing and facing the prospect of further interest rate hikes squeezing the governments finances further (following pandemic spending especially) this is worrying for many. Refusing to impose a windfall tax on seemingly gross profits by energy firms remains particularly contentious. Are future tax hikes inevitable? Sterling gained some ground on the news but still seems stuck versus the Euro, although has increased against the USD.
The Euro has also made gains against the USD back towards parity following yesterday 0.75pc rise on interest rates in Europe, seeing the benchmark lending rate at 1.25pc.
Significant also was the following press conference where governor Christine Lagarde indicated that the market should expect between two and five further hikes to interest rates from the ECB in an attempt to curb rising inflation, currently over 9pc. Concerns however arise from the fact that the EU is quickly heading towards recession and the spiralling cost of energy following Russia’s stop in supply to the bloc. Higher interest rates mean higher costs for all borrowing.
The ECB however, had been criticised on their lack of action on curbing inflation, and trail behind both the US and UK on current interest rates and future predictions.
Exchange rates are continuing to experience high levels of volatility in the face of current global economic concerns – it’s a brave person that gambles in these conditions. Please talk to us about protecting your costs on a currency transfer as soon as possible.