It was a positive start to the week for sterling yesterday, with a modest rise against the euro, but more impressive 0.5% or so against the CHF, NOK and yuan. This morning GBP/EUR has advanced a little further, on the news that unemployment has fallen to 4%.
While average earnings have also fallen – to 3.8% (or 4.9% excluding bonuses) – the unexpectedly low unemployment level, which included 373,000 new jobs, now makes it more likely we will see only one more interest rate cut this year, probably on 7 November.
There was a swirl of positive news coming out of the UK investment summit yesterday. The £60bn pledged included £1.1bn to expand Stansted Airport, £6.3bn for data centres and £20bn for a network of fast-charging infrastructure for electric vehicles, new solar and wind power, new reservoirs and new homes, from Australian multinational Mcquarie. Investors were rewarded with Elton John performing for them.
Co-founder of Google Eric Schmidt said at the summit that the UK is well placed to take advantage of the new industrial revolution – that of AI – as the birthplace of the original industrial revolution and with a stable civil service.
Other than that, there was little data coming out of the UK yesterday, but plenty of rumour and speculation for UK business and householders as to what will be in the budget in just over two weeks. National Insurance is slated as potentially rising sharply – at least the part paid by businesses.
In the US, several members of the FOMC – the US Federal Reserve’s interest rate committee – have been speaking. Neel Kashkari said that further modest rate cuts would be appropriate, and he was supported by Christopher Waller, who also said that more rate cuts were needed, but more gradually than hitherto. Their continued hawkish approach on inflation helped to boost the dollar, which strengthened by up to 0.5% against major rivals.
On the stock markets, US tech stocks hit new record highs yesterday. With the markets closed yesterday for Columbus Day, the S&P 500 hit its 46th new high of the year.
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