The pound lost much of Tuesday’s gains against the euro yesterday as it fell nearly 0.5% on the back of Bank of England (BoE) governor Andrew Bailey’s comments that we are nearing the end of the rate hiking cycle. The euro’s gains are in spite of the fact that European economic activity and German factory activity declined in August.
The pound has continued its downward spiral against the euro this morning. Against the US dollar, sterling lost close to half a per cent yesterday, but this morning is 0.7% lower than yesterday’s high.
S&P Global construction PMI figures for the UK were released yesterday, showing that activity is hovering at 50.8, just above recession levels. Much of this activity is due to commercial work as housing construction continues to slow, with activity comparable to June 2009, just after the 2008 banking crisis.
Yesterday, European Central Bank policymaker, Peter Kazimir, said he’s pushing for a rate hike next week and hopes to “take a breather thereafter.” European economic data is light between now and the interest rate decision, which will be announced on September 14.
NatWest named its next chair to be Rick Haythornthwaite, ex-Centrica boss, who will take the reins from Howard Davies next April. This move comes after fallout from the threatened closure of Nigel Farage’s bank accounts.
British retailer, Wilko announced the full list of stores which are to close. The national secretary from GMB Union spoke out about the job losses. He said, “Every single redundancy is a person who will wake up facing an uncertain future. This needs to be on the forefront of everyone’s minds.”
This morning, the Halifax House Price Index dropped by 4.6% year-on-year in August, following a revised decline in July and compared to a market consensus of a 3.45% fall. This is the biggest decrease in house prices since August 2009, however property prices remain 17% higher than pre-pandemic levels.
In China, exports fell 8.8% year-on-year in August, marking the fourth consecutive month of declines and imports were down 7.3%, the seventh month of declines of 2023.
Later today in the American sessions, the Federal Reserve (Fed) will make several speeches which may shed light on policymakers’ thoughts as they gear up for the next interest rate decision on September 20.
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