The past 24 hours have seen more worrying signs for the UK economy. The pound has looked like a softly deflating tyre this week against both the US dollar and the euro, with the dollar firmer across the board.
However, it remains within a small margin of its best for eight months for now. To lock in this rate and ensure that there are no nasty surprises when your next purchase reaches completion, call 020 8003 4915 and a member of our team will be able to help you.
Yesterday we had the biggest global survey of business mood since the start of the war in Iran and it was as expected – a severe business slowdown in the UK. March’s purchasing managers’ index (PMI) overall reading slipped to 51.0 from 53.7 in February – still in positive territory at over 50, but with business showing clear signs of slowing down. Weirdly, Germany’s key measure was sharply up. German manufacturing bosses were at their most bullish for several years.
Even so, the big worry remains oil prices, with warnings of global recession if it stays high. The UK’s PMI report said that the rise in oil and gas prices has led to production costs at British factories rising at the quickest pace since Black Wednesday in 1992.
This morning’s inflation figure from the Office for National Statistics (ONS) was taken before the impact of the war in Iran. Although headline inflation remained stable at 3%, ‘core inflation’ rose unexpectedly to 3.2%. This is the reading with more volatile food and fuel taken out, so hardly a good sign for next month.
If energy costs keep feeding into prices, interest rate expectations can support the pound one day and hurt it the next, depending on whether people focus on “higher rates” or “higher recession risk”.
There are certainly some dire warnings of recessions coming out. In the meantime the oil markets are still listening out to messages from the White House, despite reports of insider trading and vast profits being generated around Trump’s various announcements.
Coming up on Friday, retail sales and the GfK Consumer Confidence, both good barometers of consumer mood.
