The pound has suffered 36 hours of heavy weather and is around 0.3% down on the week against the euro and a little more against the US dollar.
Sterling weakened yesterday in lockstep with tech stocks, with the Nasdaq 100 losing $1tn of its value and the S&P 500 suffering its worst day since 2022. With weak earnings in tech recently the fear among investors seems to be that they rushed into AI-based stocks prematurely. Sterling tends to move with stock markets, especially in a “risk off” environment where investors are seeking safer assets. Hence, a decline.
However, to put all that in context, sterling is still 1.5% up on this time last year against the euro and only fractionally down on the US dollar.
On Thursday the Bank of England (BoE) will be making its long-awaited post-election interest rate decision, so be prepared for exchange rate volatility. Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
The US economy was revealed yesterday to have grown by a stonking 2.8% in the year to Q2, double the annualised rate in the previous quarter and led by consumer spending. It comes at a crucial time in the US election – is the feelgood factor returning in time to help the Democrats?
In UK data on the other hand, CBI Industrial Trends showed order books declining sharply to -32, from -14 last month.
Germany’s Ifo Business Climate report was also in decline, falling to 87 when an improvement to 88.9 had been forecast. Ifo president Clemens Fuest said: “The German economy is stuck in a crisis.”
When it comes to AI, it’s a case of “Crisis, what crisis?” according to Google yesterday. The company said people should stop worrying about losing jobs and embrace the technology. “Fewer than 50% of people are actually taking advantage of these tools in their working life on a day to day basis,” said Debbie Weinstein, managing director of Google UK. The company’s researchers say that 61% of UK jobs will be radically transformed by AI, 31% “insulated” from its effects and only a tiny percentage of jobs lost.
In UK politics the new government continues to enjoy its honeymoon period. The Prime Minister was touting the launch of GBE (Great British Energy) yesterday, with investment in new wind turbines off Britain’s coast to double the UK’s wind energy production to 30GW by 2030.
