On Friday, the Gfk consumer confidence index in the UK climbed 3 points to -7 in August. This was better than the -10 the markets had been expecting, which is some welcome positive news. It was a fairly quiet day for sterling, as it continued to hover around the $1.30 mark. It will be interesting to see when the next big move comes and, when it does, in which direction it will be.
Remember – the day before the results of the EU referendum, the pound was worth $1.50 at one point. It is remarkable to think how volatile the pound has been since then, with some analysts forecasting parity with the euro before the end of 2018 (they have since conceded they were wrong). The point of all this is to highlight just how important it is to protect your budget, such as using a forward contract to lock in an exchange rate. We are living in unprecedented times and, while periods of turbulence have always existed, the prospect of Brexit, in-fighting in the UK government and Donald Trump really do make things unpredictable.
Where were we? Oh yes – Nationwide housing prices were also released and showed that they recorded their biggest month-on-month fall in six years. Prices declined by 0.5% in August, which was the sharpest fall since July 2012. Remarkably, more than £2,200 was stripped from the typical price tag. The fall is likely driven by a decline in London prices.
Today, we have the Markit manufacturing PMI figures for August. Last month, the reading came in at 54.0 which was the lowest reading for three months. It is expected to dip once more to 53.8. MPs will return from their summer recess tomorrow and we will also see construction PMI for August.
