Sterling briefly touched its highest pro-Brexit level against the euro after the European Central Bank cut interest rates for the fourth time this year amid a warning of slower growth.
The pound rose 0.13% to hit €1.215, though the latter rallied to end the day at €1.211 against the pound.
European equities rose after Frankfurt’s policy makers made their move to cut rates to 3% amid inflationary pressures. It cut its forecast for growth for the eurozone economy next year to 1.1%, from the 1.3% it had expected in September.
This is before factoring in any Trump tariffs. It projected headline inflation to average 2.4% in 2024 and 1.9% by 2026.
The bank said surveys indicated growth was slowing in the current quarter and that the recovery depended on consumers spending more and businesses increasing their investments.
Germany, its biggest economy, is struggling with high energy prices, higher labour costs, and the need to shoulder a greater defence burden. France is beset with political in-fighting.
On the upside, Portugal, Ireland, Greece and Spain – the so-called PIGS – are flying and are now the eurozone’s outperformers.
There was a surprise 50bps interest rate cut by the Swiss National Bank. Attention will now switch to the US and UK which announce their interest rate decisions next week.
The FTSE 100 index gained 0.12% to end at 8,311.76 points Currys surged 16.77% after reporting a return to profitability in the first half, supported by strong performance in the UK and Ireland, which helped offset weakness in its Nordic operations.
Diageo rose 2.77% following an upgrade to ‘buy’ from ‘sell’ by UBS, which highlighted upside potential in the company’s US business.
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