UK diplomats meet rebel leader in Damascus

London: British diplomats have held talks with the leader of the Syrian rebel group Hayat Tahrir al-Sham (HTS), following its ousting of President Bashar al-Assad more than a week ago.

Images posted on social media by the group’s military operations department showed HTS leader Ahmad al-Sharaa – formerly known as Mohammed al-Golani – meeting senior officials in the Syrian capital, Damascus.

Among those photographed alongside him was Ann Snow, the UK’s special representative for Syria.

HTS said the delegation had discussed “the latest developments” in the country.

Al-Sharaa also gave an interview to the Times newspaper in which he called on the West to lift all sanctions imposed on Syria under the Assad regime – including the designation of HTS as a terrorist organisation.

“They should lift all restrictions, which were imposed on the flogger and the victim – the flogger is gone now. This issue is not up for negotiation,” he said.

Monday’s talks with the British diplomats come after Foreign Secretary David Lammy revealed the government had established “diplomatic contact” with HTS, which the UK considers to be a terrorist organisation.

Speaking about his hopes for Syria’s new leaders, Lammy said: “We want to see a representative government, an inclusive government. We want to see chemical weapons stockpiles secured, and not used, and we want to ensure that there is not continuing violence.

“For all of those reasons, using all the channels that we have available, and those are diplomatic and of course intelligence-led channels, we seek to deal with HTS where we have to.”

The government has announced a £50m humanitarian aid package for vulnerable Syrians, including refugees in the region.

The UN has estimated that at least 374,000 Syrians have been displaced by the fighting that led to the topping of Assad, on top of the millions already made homeless by the country’s civil war.

Sterling drops before Fed policy meeting, after UK inflation data

London: Sterling fell versus the dollar before the Federal Reserve’s policy meeting later on Wednesday, which could suggest a less aggressive monetary easing path in the U.S., while British inflation figures were in line with analyst expectations.

Consumer prices rose by an annual 2.6% in November, although services inflation held at 5.0%.

Money market bets on the Bank of England interest rate outlook were roughly unchanged, with 57 basis points (bps) of monetary easing expected by the end of 2025 from 55 bps just before the release of the inflation figures.

Front-end UK rates were softer, with 2-year gilt yields down 3 bps to 4.41%. The 10-year yields were at 4.51%, not far from 4.594%, their highest since October 2008.

“Today’s data will only reinforce the Monetary Policy Committee’s (MPC) message of patience and gradualism,” said Sanjay Raja, chief UK economist at Deutsche Bank, arguing the MPC “is some way away from declaring victory on inflation.”

“Price pressures are resurfacing again – with employers likely to start ramping up prices at the start of the year to account for the employer National Insurance Contributions’ (NIC) increase,” he added.

The pound softened against the euro , with the single currency up 0.23% to 82.70 pence. The euro hit 82.51 pence last week, its lowest since March 2022.

Investors still expect the pound to be firm as the yield divergence with the euro area will be significant.

While markets price around 55 bps of cut by the BoE in 2025, they discount a European Central Bank deposit rate at 1.8% in December next year from the current 3%.

Analysts also flagged that recent data showing an acceleration of UK wage growth offered a reason for hawks to get louder in the MPC. The rise was all in the private sector, where pay trends are more linked to economic trends.

“The BoE policy outlook is muddled by weaker evidence that the NIC hike will also be inflationary,” said Shaan Raithatha, senior economist at Vanguard.

British companies have flagged an increase of 1.1 billion pounds in labour costs related to a rise in employers’ social security contributions and minimum wages following Finance Minister Rachel Reeves’ maiden budget in October.