Sterling started to recover some of its losses from earlier this week on Wednesday, as the mood in currency markets pivoted to something more positive.
GBP/EUR gained around a quarter of a per cent after letting go of some further advances in the morning session. GBP/USD climbed by a similar amount and the euro continued to trade well against the US dollar.
Despite having found its feet once again, currency markets continue to look to Japan with a degree of apprehension. The Japanese yen has been nothing if not volatile recently and that trend continued yesterday, as the yen fell by almost 2% against the pound and the US dollar.
The latest movements stemming from Japan have seen its stock market stabilise – the benchmark index Nikkei 225 has now all but recovered its huge losses from Monday. However, the assurance from central banker Shinichi Uchida that the Bank of Japan would not hike interest rates amid market volatility served to strain its currency.
Elsewhere, a quiet day for macroeconomic data helped markets regain their composure. August has a reputation for being a quiet month, but it has produced some major events in the past. Add to this the smaller volume of trades that take place and market shocks like we’ve seen this week can quickly spread.
France’s trade deficit fell to €6.1bn in June. That is the smallest deficit in three months, driven by higher exports and changes to how France distributes the energy it creates. The effect of a certain ongoing sporting event should begin to feed into the data over the coming months.
After what was a pretty bruising stretch, tech stocks staged a comeback yesterday. Amazon, Apple and Microsoft were all over 2% up shortly after the Wall Street open. The one outlier was Airbnb, whose shares dropped by 14% after it missed its second quarter earnings target.
UK chancellor Rachel Reeves was in Toronto yesterday as part of a plan to create a ‘Canadian-style’ government pension system. Reeves wants UK providers to have more market clout, which could be achieved by consolidated the countless fragmented schemes into a couple of megafunds.
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