Dear Reader,

Here is an overview of today's economic news and market action:

• Risk averse tone to investor sentiment intensified yesterday …
• Sterling on the front foot early on …
• However, as risk appetite soured the dollar gained the ascendancy …
• Sees EUR/USD open down in the lower half of $1.07-1.08 …
• GBP/USD is operating back at the midpoint of $1.23-1.24 …
• EUR/GBP is in and around the 87p handle …
• Focus likely to remain on the US debt ceiling negotiations today …

PMI eased back to 48.6 in Apr, indicating a further softening in business conditions. New orders, including exports, and output fell. Meantime, there was a notable easing in inflation Traditional industrial production rose sharply in Mar, leaving it up by 2.3% QoQ and 7% YoY in Q1.

UK Economy Down, But Not Out

The Bank of England’s (BoE) latest set of detailed economic forecasts show it is no longer expecting a recession in the UK. The forecasts are contained in its quarterly Monetary Policy Report for May 2023.

Life in the old buck yet

The dollar was in the ascendancy from mid-2021 through to autumn 2022 as hikes in US interest rates, rising US bond yields and elevated geo-political tensions drove the currency to twenty year highs