While sterling has limped into the last weekend of summer against the US dollar, August more generally has been positive, with a 1% gain on the euro, Swiss franc and others.
The interest rate cut on 7 August was responsible, or more pertinently the increased unlikelihood of it being repeated this side of Christmas in the face of rising inflation and signs of economic growth.
Yesterday we had some good news on UK economic confidence, with the Purchasing Managers Index (PMI), a reliable gauge of business mood, racing away to its best level for a year for the UK’s service sector. Moreover, overnight the GfK Consumer Confidence Index was also at its best for a year in the UK – albeit still broadly negative.
US PMI was also strong, bouncing back from a reading of 49.8 (anything below 50 denotes a pessimistic outlook) to 53.3 for its manufacturing sector – its best for several years.
It’s a quiet week for UK data next week, but there is plenty happening elsewhere for the markets to chew over, including US GDP and European inflation.
For Britain, as autumn arrives so thoughts will turn to the autumn budget in October, and how the chancellor can balance the books without raising personal taxes or killing business growth. Some commentators are suggesting that property and wealth taxes could be the answer, with a new annual tax for properties valued at over £500,000, or a replacement for stamp duty that is paid by the seller.
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