Sterling came out ahead on Thursday, picking up 0.15% on the dollar and more than 0.25% on the euro. After a jobs report out of the US showed a contracting market, the pound was up significantly higher, but USD stabilised as the day wore on.
Despite the US government shutting down on Tuesday, traders on the UK stock market seemed unconcerned, pushing the FTSE 100 share index up to a new high. In part, this was due to a threatened tariff on branded drugs failing to materialise, driving people to buy shares in AstraZeneca, GSK and Hikma.
The UK housing market also showed growth of 0.5% in September, following a decline in August.
Though, tomorrow sees fresh forecasts from the Office for Budget Responsibility, which are expected to bring an £18 billion productivity downgrade. Such a huge hit to the UK’s economic expectations will force Chancellor Rachel Reeves to raise taxes and cut services in the autumn budget on November 26.
Although the US government shutdown on Tuesday evening doesn’t appear to have impacted the dollar heavily, gold hit a new high, suggesting traders are looking for a safe place to store their money.
Separately, a US labour report revealing private employers had closed 32,000 jobs in September which sent the dollar down significantly, although it largely recovered by day’s end. The warning signs from the US labour market are likely to drive interest rates down when the Federal Reserve governors next meet.
Following individual countries’ inflation reports on Tuesday, the EU-wide report revealed that inflation had crept up to 2.2% from the 2% target. While analysts don’t expect that small increase will lead to a rise in interest rates when the European Central Bank next meets, it’s a sign of how hard it is to keep a grip on inflation in the current climate.
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