2026-01-08 11:13

Sterling declines amid strengthening dollar and cautious market sentiment UK growth outlook may improve in 2026, analysts suggest UK fiscal and political risks reduced, supporting sterling Jan 8 (Reuters) - Sterling was set for a third consecutive decline versus a strengthening dollar on Thursday, as retreating risk appetite stripped away support for the British currency. The greenback edged up after mixed U.S. economic data left markets cautious ahead of Friday’s nonfarm payrolls report. Sign up here. European shares extended losses on Thursday after downbeat retail earnings from top companies, while softer gold and copper prices pressured market sentiment. Sterling was down 0.1% at $1.3444 against the greenback , after hitting $1.3567 on Tuesday, its highest level since September 18. STERLING MIGHT PERFORM BETTER THAN EXPECTED Analysts said market participants had been too gloomy about the outlook for UK growth and that sterling might perform better than expected in 2026 amid fewer concerns about the state of the economy. However, in the near term sterling moves will be dollar-driven, as clearer indications about the UK economy will have to wait for gross domestic product data due next week and jobs data the week after. "If we look at the performance of the pound right at the start of the year, it’s doing really quite well even though there wasn’t an awful lot of data and I think that is still a response to the fact that ahead of the budget the market had built up an awful lot of short positions," said Jane Foley, head of forex strategy at Rabobank. "After the budget through December it started to correct those and I think that carried on into the first days of the month," she added, arguing that investors will be closely watching new economic data. A reduction in UK fiscal and political risks has supported the British currency since finance minister Rachel Reeves presented the budget in November. "Taken together recent UK data confirms that consumers were perhaps less adversely impacted by the budget headlines than had previously been feared, the flip side being that scope for a further strengthening in consumption growth might be rather more limited going forward than had been thought likely," said Jeremy Batstone-Carr, an economist at Raymond James. The euro rose 0.10% to 86.87 pence . It had dropped as low as 86.44 pence on Tuesday, its lowest since mid-September. Domestic political developments in Britain and the chance of a closer relationship with Europe are also under the spotlight as this would provide greater access to the EU single market, potentially boosting exports and economic growth in the UK. Prime Minister Keir Starmer said on Sunday that Britain should seek closer alignment with the European single market. (This story has been refiled to correct a typo in the reporting credit in the sign-off) https://www.reuters.com/world/uk/sterling-track-third-straight-daily-fall-versus-dollar-2026-01-08/

2026-01-08 10:58

Central bank expects inflation to increase in coming months Swiss inflation edged higher in December SNB sees current monetary conditions as "appropriate" ZURICH, Jan 8 (Reuters) - The Swiss National Bank's policymakers expect inflation to revive gradually, the minutes of their latest rate-setting meeting showed on Thursday, which will help it avoid cutting or hiking interest rates. The SNB left its policy rate unchanged at 0% on December 11, as widely expected, keeping in place the lowest interest rate among the world's major central banks. Sign up here. The central bank said that although inflation had declined, its forecasts over the longer term were in line with its 0-2% target it calls price stability. The SNB issued a forecast in December saying inflation would average 0.3% in 2026 and 0.6% in 2027, and the Federal Statistics Office said on Thursday that prices had edged up 0.1% in December. "Having declined somewhat in recent months, inflation is likely to increase again over the course of the forecast period, thus remaining within the range consistent with price stability," the SNB minutes from its December decision read. "In light of the outlooks presented with regard to inflation and the economy, the Governing Board determined that monetary conditions are currently appropriate." SNB SAW NO REASON TO ALTER RATES In this situation, neither increasing nor decreasing interest rates was seen as appropriate, the SNB said. It is only the second time the central bank has released the minutes of its decision-making process, following its first publication in October. Karsten Junius, an economist at J.Safra Sarasin, said the minutes showed the SNB had no clear bias on the direction of rates. "By stressing their neutral stance, I think this points to the SNB avoiding either rates cuts or hikes for the foreseeable future," said Junius, who expects no changes for the next 18 months. The SNB also noted that the economic outlook has improved slightly due to the reduction in U.S. tariffs on Swiss goods from 39% to 15%. Swings in economic growth were seen during 2025 as Swiss companies rushed to supply the U.S. before the tariffs were imposed, pushing GDP negative in the third quarter. "These compensations are now expected to have been completed," the SNB said. https://www.reuters.com/business/finance/swiss-rates-likely-stay-hold-snb-minutes-indicate-2026-01-08/

2026-01-08 10:38

LONDON, Jan 8 (Reuters) - British companies slightly lowered their still-high expectations for growth in wages and prices, according to a survey published by the Bank of England that underscored why the central bank is likely to remain cautious about interest rate cuts this year. The monthly Decision Maker Panel, released on Thursday, showed businesses saw wage growth of 3.7% over the 12 months from the final quarter of 2025, down by only 0.1 percentage points from the three months to November. Sign up here. Firms' expectations for their own price inflation in the year ahead also barely fell, edging down by 0.1 percentage points to 3.6% in the three months to December. Expectations for employment growth over the next year weakened slightly, the BoE said. Rob Wood, chief UK economist at Pantheon Macroeconomics, said the survey suggested firms were putting behind them months of speculation about finance minister Rachel Reeves' budget which she announced in late November, but wage growth and inflation remained too high for comfort for the BoE. "The Monetary Policy Committee will have to be cautious, so we are comfortable assuming only one more rate cut this year," Wood said. The BoE survey showed companies expected consumer price inflation of 3.4% in the coming 12 months, the same as in November and way above the central bank's 2% target. Britain's headline rate of inflation fell to 3.2% in November, and the BoE cut interest rates to 3.75% in December from 4%. Financial markets are pricing in one or two quarter-point cuts in 2026. ($1 = 0.7444 pounds) https://www.reuters.com/sustainability/sustainable-finance-reporting/uk-firms-trim-wage-growth-expectations-boe-survey-shows-2026-01-08/

2026-01-08 07:35

ROME, Jan 8 (Reuters) - Italy wants a stricter threshold for the suspension of imports under the planned Mercosur trade agreement, its agriculture minister said in an interview published on Thursday, ahead of an EU vote on the treaty where Rome's stance could prove decisive. Francesco Lollobrigida told financial daily Il Sole 24 Ore that Rome was pushing to lower the point at which safeguard clauses would be triggered, reducing it to 5% from the 8% currently proposed. Sign up here. Under the mechanism, the agreement would be suspended if imports from Latin America rose above that threshold or if European agricultural prices fell by more than the same amount. "We want this 8% threshold to be lowered to 5%. And we believe there are the conditions to achieve this result," Lollobrigida was quoted as saying. He also said Italy's diplomats were carrying out final technical and political checks after receiving initial guarantees on food‑safety reciprocity, an issue Rome has long raised. Italy wants to ensure that farm products imported into the EU meet the same standards required of EU producers. "We're down to the last mile," he said, adding that EU countries will review progress at a meeting of member‑state representatives (Coreper) on Friday. https://www.reuters.com/business/italy-wants-stricter-5-safeguard-trigger-mercosur-deal-minister-says-2026-01-08/

2026-01-08 07:32

Shell says oil trading results 'significantly' below Q3 Oil, gas, LNG production forecasts remain within guidance Analysts cut earnings estimates, raise prospect of reduced share buybacks LONDON, Jan 8 (Reuters) - Shell (SHEL.L) , opens new tab expects a loss in its chemicals and products business in the fourth quarter due in part to "significantly lower" oil trading results, the energy giant said in a trading update on Thursday. Shell's chemicals and products earnings include revenues from its large trading desk for crude oil and refined products like diesel, gasoline and jet fuel. The segment will also be dragged down by an expected drop in chemicals margins to $140 a metric ton from $160 in the third quarter as well as a tax adjustment, the company said. Sign up here. Energy majors do not typically divulge detailed results of their trading divisions, saying that publishing such details would reduce their competitive advantage. Shell's chemicals and products business last recorded a quarterly loss in the final three months of 2024. The company, meanwhile, maintained its oil, gas and liquefied natural gas output forecasts within previous guidance. ANALYSTS CUT EARNINGS ESTIMATES, QUESTION SHARE BUYBACK Shell shares fell 2.6% by 1039 GMT, underperforming a broader European energy sector (.SXEP.) , opens new tab that dipped 1.2%, as analysts parsed the revised outlook. RBC analyst Biraj Borkhataria predicted Shell would exceed its targeted shareholder payout ratio of 40% to 50% of cash flow from operations over 12 months. The ratio stood at 48% in the last quarter. "The question is whether the board/management team is willing to look beyond a particularly weak quarter and hold the line on the buyback at $3.5 billion, given a strong balance sheet," he wrote in a note. UBS analyst Josh Stone cut his estimate for fourth-quarter net income by 14% to $3.6 billion and operating cash flow by 9% to $8.7 billion, following the trading update, adding that he expects quarterly buybacks to be reduced to $3 billion. Citi analyst Alastair Syme, meanwhile, lowered his estimates for net income by 11% to $3.83 billion and operating cash flow by 6% to $8.64 billion. OUTPUT TO STAY WITHIN PREVIOUS GUIDED RANGE Fourth-quarter oil-focused upstream production was expected to remain within the range of previous guidance at about 1.84 million barrels of oil equivalent per day to 1.94 million boed, Shell said. In the third quarter, it produced 1.83 million boed. Integrated gas production was also forecast to be within previous guidance at 930,000 boed to 970,000 boed, it added. The company produced 934,000 boed in the third quarter. Shell expects to liquefy between 7.5 million tons and 7.9 million tons of LNG, within a previous forecast of 7.4 million to 8 million tons. It forecast its indicative refining margin to rise to $14 a barrel in the fourth quarter from $12 in the previous quarter. https://www.reuters.com/business/energy/shell-narrows-outlook-third-quarter-lng-output-2026-01-08/

2026-01-08 07:29

SYDNEY, Jan 8 (Reuters) - Uncontrolled fires burned through bushland in the Australian state of Victoria on Thursday, forcing communities to evacuate and authorities to warn of a "catastrophic" fire danger rating for Friday. Amid temperatures that exceeded 40 degrees Celsius (104 degrees Fahrenheit) in parts of the state, two large bushfires were raging near the towns of Longwood and Walwa. Sign up here. The fires have destroyed at least two structures and are expected to continue to spread on Friday as heat and wind pick up, authorities said. The Longwood fire has grown to more than 25,000 hectares (61,776 acres) in size, while the Walwa fire is 10,000 hectares (24,710 acres) and has created its own weather system, with a pyrocumulonimbus cloud causing lightning and thunder. Residents in dozens of neighbouring towns have been told to evacuate. Friday's fire danger rating will be set at "catastrophic", the highest level, and both fires pose a real risk of loss of life and property, authorities said. "Tomorrow is a very, very dire bushfire day in the state of Victoria," Country Fire Authority Chief Officer Jason Heffernan told a news conference. The bushfires come amid an intense summer heatwave in Australia's south. Meteorologists have said conditions are on par with 2019, when bushfires destroyed wide swathes of southeastern Australia, killing 33 people, in what became known as the Black Summer. Some 450 schools in Victoria are set to close on Friday and many regional train services will be cancelled. For Thursday, total fire bans have been issued in several districts. A total fire ban will be imposed across the whole state on Friday. In New Zealand, the country's weather provider, MetService, also warned of record warm temperatures over the weekend as the heatwave moves across the Tasman Sea. It has issued heat alerts for parts of the eastern coast of New Zealand and the north of the South Island. https://www.reuters.com/sustainability/climate-energy/bushfires-rage-australias-southeast-authorities-warn-catastrophic-friday-2026-01-08/