June 22, 2023

Daily Report 22/06/2023

Share this:


great british pound icon

The latest UK government borrowing figure was wider than expected as government subsidy payments and debt interest payments remained at elevated levels. The debt/GDP ratio also exceeded 100% for the first time since 1961. Sterling was unable to hold initial gains after the higher than expected inflation data with fresh concerns over the UK fundamentals. The UK CBI industrial orders index improved marginally to –15 for May from –17 previously which was marginally stronger than expected and a six-month high. Export orders, however, declined again with the weakest reading since February 2021. The CBI also expects manufacturing contraction for the second quarter. Consensus forecasts are for the Bank of England to raise interest rates by 25 basis points on Thursday, although there has been increased speculation over a 50 basis-point move following the stronger than expected inflation data.

Key Data 

12.00 Bank of England Interest Rate Decision Exp. 4.75% Curr. 4.5%
12.00 Bank of England Minutes

Euro logo

In its latest update, the German IFO institute stated that the German downturn will be steeper than expected. It now expects GDP will contract 0.4% in 2023 compared with previous expectations of a 0.1% decline. As far as inflation is concerned, it expects a 5.8% rate this year with a decline to 2.1% in 2024. ECB rhetoric remained under scrutiny. Council member Schnabel stated that domestic inflation is being driven by profits and wages. Bundesbank head Nagel commented that he is confident that inflation will come back to the 2% target. He did, however, add that there is still a long way to go before then.

No Key Data

dollars icon

In prepared text, Fed Chair Powell stated that the process of getting inflation down to 2% has a long way to go and that the central bank participants expect that interest rates will need to increase further. Powell added that it made sense to move rates higher at a more moderate pace. Powell also stated that there is evidence of a cooling in the labour market with lower quit rates and falling job openings, but there are still significant labour shortages. Fed Governor Cook stated that the bank is not there yet on getting inflation back to target.

Key Data 

15.00 Jerome Powell Testifies