The pound weakened against the euro and US dollar yesterday, following the widely predicted interest rate hold from the Bank of England. It has fallen further this morning to a five-week low against the euro, after news of more challenges for the chancellor.
Nevertheless, yesterday was a rare day where the prime minister was able to pat himself on the back, for a state visit from President Trump that came with billions of pounds of trade deals and the UK hailed as a tech superpower by global tech and AI leaders. Those investments included £22bn from Microsoft to build AI infrastructure, plus agreements to speed up nuclear reactor design.
For Kier Starmer yesterday also saw the first illegal migrant removal flight, and a challenger left-wing party led by Jeremy Corbyn appearing to implode.
But the challenges remain, and nowhere more than the economy. This morning we have heard that government borrowing soared to £18bn in August, the highest August borrowing for five years.
The pound has dipped sharply this morning in response to that, with GBP/USD down 0.75% since yesterday and GBP/EUR down 0.5%.
Other data out this morning gave a mixed picture for consumer mood. The GfK Consumer Confidence index fell, with the public telling researchers they were worried about potential tax rises in the Autumn Budget, which weighed more heavily than delight at the recent interest rate cut.
Retail sales were better than expected, but this was largely credited to the weather, with clothing stores perked up by the early arrival of autumnal weather.
So where does all this leave the value of sterling? Against the euro it is 3.5% down on a year ago, and seemingly on a new downswing after a month of relative stability.
Against the US dollar, the reversal of the past three days comes on the back of growth and only returns GBP/USD to where it was a month ago, still more than 2% up on last year.
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