So Liz in the hot seat. For those of you who are local to Suffolk you’ll see that Theresa Coffey has made it as her right hand woman. To think that she had an office above Tesco’s in Felixstowe only a month ago!!!
As above Liz Truss won the PM candidate race which in turn propelled chatters over her plan to freeze energy prices and help power companies in Britain. In fact, Britain’s new prime minister is working on what looks set to be Europe’s biggest energy crisis support package as various countries scramble to protect households and businesses from soaring bills. Essentially, Liz proposed to freeze roughly £130 billion in energy bills while mulling another £40 billion for small businesses. However, lingering fears of recession took clues from the firmer data and growing uncertainty over the Bank of England’s next move which have seen the British pound retrace all of yesterday’s gains against the US dollar. Ultimately, the British pound seems to be consolidating in wait of a clear direction and additional support which could arrive as early as Thursday once Liz Truss reveals her relief package. Watch this space, hoping for a rally once she lines up her plans
On the eurozone front…two-decade low against the Dollar!, as EU ministers prepare to meet on Friday to discuss the ongoing energy crisis. European governments are pushing through multibillion-euro packages to prevent utilities from collapsing and protect households amid soaring energy costs triggered mainly by the fallout from Russia’s invasion of Ukraine. In fact, benchmark European gas prices have surged about 340% in a year and jumped as much as 35% on Monday after Russia’s state-controlled Gazprom said it would indefinitely extend a shutdown to the major Nord Stream 1 gas pipeline. Additionally, investors are awaiting the announcement of the interest rate decision by the European Central Bank on Thursday. As per the consensus, ECB President Christine Lagarde is expected to announce a rate hike by at least 50-basis points.
USD is continuing to extended its winning streak yesterday ending the session higher against most of its major rivals. In fact, the dollar index rallied to new 20-year highs at 110.68 after U.S. service sector data unexpectedly beat expectations. The economic reading points to more resilience in the U.S. economy, giving the Fed further space to sharply hike interest rates. Traders are now pricing in an over 70% chance that the central bank will raise rates by 75-basis points in September. Going forward, Thursday’s speech from Federal Reserve chair Jerome Powell will hog the limelight. As price pressures in the US economy are highly deviated from the desired rate of 2% despite showing exhaustion signals, Fed Powell will probably sound hawkish and will most likely discuss a third consecutive 75-basis points rate hike adding more fuel to the dollar’s unstoppable appreciation.
Have a good day all, here if you need