Sterling hit 1.35 against the dollar in early European trading on Wednesday for the first time since December 4 before hitting 1.3548, its highest level since May 2018, before falling back at press time. Meanwhile, the yield on 10-year UK government bonds hit 0.289 per cent, the highest level since December 8.
A number of core UK economic data were released in Europe today. Britain’s CPI recorded a negative 0.1 percent in November, returning to negative territory for the second time in two months. November’s retail price index also registered a negative 0.3 per cent monthly reading, well below expectations of 0.2 per cent. Financial website Forexlive commented:
The figures were a far cry from forecasts of inflationary pressures, as the report merely reiterated the moderate headline price pressures heading into the year-end. That will keep the Bank of England on its toes next year.
The UK manufacturing PMI unexpectedly jumped to 57.3 in December from 55.9, up from 55.6. The services PMI came in at 49.9, below expectations of 50.5 but still slightly higher than the previous reading of 47.6. Analysis by IHS Markit chief economist William Williamson:
The UK recovery has been lacklustre, with further significant declines in output in consumer-oriented services, particularly hotels, restaurants and tourism, largely offsetting renewed growth in business services, transport and manufacturing. Britain’s economy returned to growth in December after a downturn in economic blockade measures in November, and there are signs that the second wave of the epidemic has so far hit the economy less badly than the first.
The UK has made a key concession to renationalise its fishing fleet in the brexit negotiations, dropping its insistence that current British flagged fishing vessels should in future be majority-owned by Britons. The EU’s chief Brexit negotiator, Michel Barnier, told MEPs on Monday that in response he had compromised on the “structure” of the fisheries deal, accepting a transitional period to bring about gradual changes.
But there is no agreement on how many EU vessels fishing in UK waters will be repatriated and whether EU vessels will be able to fish six to 12 miles off the UK coast.
On Wednesday afternoon, the most recent statement from EU officials said that the EU was currently rejecting a British proposal to enter British waters in stages over three years. A British source, responding to comments by European Commission President Catherine Von Der Leyen on The subject of Brexit, said there had been some progress in the brexit negotiations, but there were still significant gaps in key areas.
Meanwhile, UK officials said this afternoon (Beijing time) that 137,897 people had been vaccinated against the coronavirus. British Prime Minister Boris Johnson commented that our vaccine roll-out was off to a good start.
Today, the epidemic in the UK remains severe, with more than 20,000 people diagnosed in a single day. The Secretary of State for health revealed this week that the novel Coronavirus strain, a variant of which had been found in the south of England, had so far recorded 1,000 cases in the region of 60 and could not be ruled out as being related to the increased transmissibility of the virus variant.