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May 27th - British household energy bills are set to see their biggest increase since 2023 due to the war with Iran pushing up wholesale gas and electricity prices, further exacerbating inflationary pressures already weighing on the UK economy. The UK energy regulator, Ofgem, announced on Wednesday that the energy price cap will be raised by 13% to £1862 from July 1st. This price cap is updated quarterly, and the previous pricing used market data prior to the escalation of the Middle East conflict; therefore, this adjustment is the first to fully reflect the impact of the recent turmoil in the Middle East. Since the start of the conflict, UK near-month gas futures prices have risen by over 40%, while electricity contract prices have risen by nearly a third over the same period. Energy consultancy Cornwall Insight predicts that UK energy bills will rise again in October, warning that even if the conflict ends quickly, prices will struggle to return to April levels due to damaged infrastructure and prolonged energy supply disruptions.Both WTI and Brent crude oil prices fell by more than 2.00% intraday, currently trading at $94.27 per barrel and $94.57 per barrel, respectively.Euro Stoxx 50 futures rose 0.35%, German DAX 30 futures rose 0.31%, French CAC 40 futures rose 0.47%, and UK FTSE 100 futures fell 0.11%.Ofgem (UKs Office for the Gas and Electricity Markets) says that from July onwards, electricity price increases will be lower than gas price increases – a situation different from that during the energy crisis.Ofgem (UKs Office for Gas and Electricity Markets) stated that the price increase was due to rising wholesale gas prices caused by ongoing conflict in the Middle East.

The EUR/GBP is fluctuating close to 0.8750 as focus shifts to UK inflation and BoE policy

Alina Haynes

Mar 20, 2023 13:22

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The EUR/GBP pair is exhibiting a lackluster performance around 0.8750 during the Asian session. As investors prepare for the release of the Bank of England's (BOE) interest rate decision and the United Kingdom's Consumer Price Index (CPI) this week, the cross has moved sideways.

 

Despite the fact that the headline asserts that UBS has revitalized Credit Suisse, the cross appears to be weak. Credit Suisse shareholders will receive one share of UBS for every 22.48 Credit Suisse shares they own, valuing the bank at $3.15 billion (£2.6 billion), according to BBC News. The Swiss National Bank (SNB) stated that the agreement was the most effective means of restoring market confidence and mitigating economic risks. Additionally, the BoE endorsed the "comprehensive set of actions."

 

The consensus opinion on the street is that Governor Andrew Bailey of the Bank of England (BoE) will provide a pessimistic outlook for the interest rate decision amidst concerns of banking turmoil, which will be his top priority.

 

Rabobank analysts also anticipate a 25 basis point (bps) rate hike and caution that the market has not fully factored in this scenario. Andrew Bailey, governor of the Bank of England, would raise rates by 25 basis points to 4.25 percent.

 

Prior to that, the UK inflation data released on Wednesday will be attentively monitored. The annual headline CPI is expected to decline from 10.1% to 9.8%, according to projections. At 5.8%, the core CPI, which excludes the cost of fuels and food, would not change. It should be aware that persistent inflation in the United Kingdom is due to rising food prices and a labor shortage.

 

After the European Central Bank (ECB) raised interest rates by 50 basis points (bps) last week, Gediminas imkus, a member of the ECB Governing Council, stated on Friday that "the terminal rate has not yet been reached" For further deflation, extremely persistent inflation in the Eurozone requires higher interest rates.


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