GDP contracted 0.6% in June alone as Britain faces a prolonged recession and the worst inflationary crisis since the 1970s.
“In addition to the Russian threat from energy prices, the European manufacturing industry now has to contend with drought conditions and low water levels on the Rhine,” added ING. “That will challenge coal shipments, amongst other cargoes, and is keeping European natural gas prices bid near the highs. This factor remains an outright euro negative.”
U.S. inflation figures on Wednesday and Thursday were lower than expected, boosting riskier assets such as equities and weakening the dollar, as markets interpreted the data as indicating the Fed could be less aggressive in rate hikes. But Fed officials made clear they would continue to tighten monetary policy. San Francisco Federal Reserve Bank President Mary Daly said on Thursday she was open to the possibility of another 75 basis point (bp) hike in September to fight too-high inflation.