Sterling managed to remain stable against the main G3 currency pairings, despite UK Manufacturing PMI’s dropping to the lowest figure since the pandemic – demonstrating the consequences of higher interest rates by the Bank of England. This has led to renewed UK recession fears, as the Bank of England warns about rising corporate default risk within the UK economy, which is likely to drive volatility in the second half of the year.
Eurozone’s PMI numbers fell further than expected, signalling economic contraction and raising concerns of a potential pause in rate hikes. Germany saw the steepest decline in business activity since May 2020, which led to the Euro weakening against most of its major peers.
The Jackson Hole Economic Symposium starts today, with central bank and economic leaders congregating to discuss the ‘Structural shifts in the Global Economy’. Leading up to the symposium, the US economy has shown signs of moderating inflation but remains far off the Fed’s 2% target level. All eyes will be on the Fed chairman, Jeremy Powell’s, speech tomorrow for hints on upcoming interest rate decisions.
