UK's Inflation Accelerated Ahead of BoE Rate Decisions, Pound Holds Firm Euro Retains Downward Bias

Bridgette Randall
18 Dec, 2024
London

European markets hugged the flatline, the euro retained its downward bias, and the pound held firm ahead of rate decisions from the Bank of England. 

Benchmark indexes in Paris, Frankfurt, and London edged slightly higher in quiet trading, and investors reviewed the latest inflation update in the U.K. 

The UK's consumer price inflation accelerated to 2.6% in November from 2.3% in October, the Office for National Statistics reported Wednesday. 

Core inflation, which excludes volatile food, alcohol, tobacco, and energy prices, advanced to 3.5% in November from 3.3% in the previous month.

The latest inflation report supports the case for the Bank of England to hold rates steady at its final meeting of the year on Thursday. 

The Federal Reserve is scheduled to announce its rate decisions and economic outlook later today, and investors are anticipating a cut of 25 basis points. 

In addition, investors are estimating slower rate cuts in 2025, totaling one percentage point amid stubborn inflation and policy uncertainties of the Trump administration. 

 

Europe Indexes and Yields

The DAX index increased by 0.4% to 20,318.97; the CAC-40 index rose by 0.4% to 7,391.90; and the FTSE 100 index inched higher by 0.2% to 8,211.95.

The yield on 10-year German bonds edged higher to 2.24%, French bonds inched up to 3.04%, the UK gilts increased to 4.55%, and Italian bonds increased to 3.41%.

The euro edged higher to $1.05; the British pound inched up to $1.27; and the U.S. dollar advanced to 89.35 Swiss cents.

Brent crude increased $0.35 to $73.55 a barrel, and the Dutch TTF natural gas fell by €1.29 to €40.73 per MWh. 

 

Europe Stock Movers

Renault SA advanced 5.8% to €47.09 after reports in Japan confirmed that Honda and Nissan have initiated merger talks. 

The French automaker, Renault, owns 23% of Nissan, and Mitsubishi may join the merger. 

Japanese automakers are struggling to gain market share amid rising competition from Chinese electric vehicle makers in Asia and South America. 

Kingfisher plc advanced 0.8% to 254.80 pence, and the British home improvement company agreed to sell Brico Depot Romania to Altex Romania for €70 million. 

ASSA ABLOY advanced 1.4% to SEK 344.20, and the access solution provider said it acquired the U.S.-based Norshield Security Products. 

Kontron AG jumped 9% to €19.57 after the German technology company said it has received an order of 165 million from a European defense company. 

Hardide PLC soared 29.6% to 6.14 pence after the tungsten carbide coating company said it secured a ten-year contract for coating aerospace cargo door components. 

Character Group PLC jumped 3.8% to 274 pence after the toy and games company reported fiscal 2024 results that met investor expectations. 

Revenue in the fiscal year ending in August increased to £123.4 million from £122.6 million, pre-tax profit advanced to £5.7 million from £4.7 million, and diluted earnings per share rose to 29.72 pence from 20.0 pence a year earlier. 

The company declared a dividend per share of 19 pence, matching the level in the previous year.