After a week of slow but sure growth against the euro, sterling dropped a third of a cent yesterday, leaving GBP/EUR essentially unchanged over the month. Better news against the US dollar yesterday and GBP/USD reaches the end of the month 1.35% up.
Overall, the currency in the ascendancy yesterday was the euro, gaining against all-comers, albeit fairly modestly. This looks to have been simply a correction from the uncertainty that surrounded a forthcoming vote of confidence in the French government.
The big data news yesterday was the American economy, which grew by an annual rate of 3.3% in the second quarter of the year. This was quite the reversal from the first quarter, where growth was minimal, and driven by a decline in imports (which are taken off GDP) and a rise in Americans’ personal spending.
In the UK the only data of note was a strong rebound in car production, which rose by 5.6% last year to 69,000 vehicles. America is the largest national market for British cars (although it is dwarfed by the eurozone as a whole), emphasising the importance to the sector of the trade deal signed. Even so, British sports carmaker Lotus has just announced that it is cutting 40% of its British workforce.
On those tariffs, exemptions on small packages arriving in the USA have now stopped. Goods worth less than $800, previously exempt, will now be subject to tariffs regardless of their value. The change seems mainly aimed at Chinese exporters such as Shein and Temu.
We’ve just had inflation data from France and it continues to be good news for British people retiring there. While inflation in France is less than 1%, the UK pension triple lock increase next year will be 4.10%, based on the higher of CPI inflation in September, average earnings growth between May and July, and the 2.5% floor.
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