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Pound hits 11-month high against dollar amid US banking turmoil, ahead of jobs report
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Pound hits 11-month high against dollar amid US banking turmoil, ahead of jobs report
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Today's agenda
The pound has climbed to its highest level against the dollar in almost a year, as fears over the health of the global economy and the health of US regional banks grip the markets.

Sterling hit $1.263 this morning, the highest level since late May 2022. Quite a recovery since last autumn, when it plumbed record depths of about $1.03 after the mini-budget shambles.

The pound is being supported by encouraging economic data this week, showing a pickup in UK mortgage applications, service sector growth, and car sales.

The dollar has weakened despite the Federal Reserve lifting US interest rates to a 16-year high this week, with traders noting that the Fed could soon end its tightening cycle.

The Bank of England is expected to raise interest rates next Thursday, to 4.5%, with the markets now pricing in one additional increase before the end of the year.

German factories have suffered one of the biggest falls in new orders in decades, giving the pound a lift against the euro.

German industrial orders fell by 10.7% month on month in March, significantly more than the 2.2% fall expected.

It is the biggest fall since demand slumped in April 2020, early in the Covid-19 pandemic.

Today’s US employment report will show if the US jobs market is cooling. Economists predict 180,000 new jobs were created in April, which would be a slowdown on March’s 236,000.

The US banking sector remains in turmoil, after shares in several regional lenders fell again yesterday.

PacWest Bancorp shed 50% by the close of trading last night, with First Horizon losing a third of its value. Western Alliance, which firmly denied a report it was exploring a potential sale, lost almost 40%.

PacWest had sought to calm markets on Wednesday and said it was in talks with several potential investors after its shares fell by as much as 60%. However, the sell-off continued on Thursday and affected other regional banks.

Another bank, HSBC, will also be in the spotlight today as it holds its annual general meeting. Investors will vote on a resolution calling for a spin-off of HSBC’s Asia business, backed by the top shareholder Ping An but opposed by the bank’s board.

The agenda
 9.30am BST: UK construction PMI for April
• 10am BST: eurozone retail sales for March
• 11am BST: HSBC’s AGM
• 1.30pm BST: US jobs report for April

We’ll be tracking all the main events throughout the day ...
Opinion
Analysis  
US banks are failing, and the authorities seem unlikely to intervene
US banks are failing, and the authorities seem unlikely to intervene

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