Worst week for Sterling post Brexit
The UK Manufacturing Production index year-on-year has fallen from a previous high of 0.7% to a low of 0.5%. Conversely, the month-on-month manufacturing figure climbed from negative territory to 0.2%. The Pound’s trade-weighted index, an average of the exchange rates with the currencies of Sterling’s most important trading pairs, has fallen to 74.2, its lowest since early 2009.
Prime Minister Theresa May now faces criticism from MPs for aiming to activate Article 50 without consulting parliamentarians. This follows criticisms for prioritising immigration over access to the single market. Sterling opened at 1.1074 versus the Euro and 1.2375 versus the Dollar.
Across the pond, investors seem to have brushed off Friday’s disappointing results from US Nonfarm Payrolls; 156K as opposed to the expected 175K. Unemployment rose marginally to 5.0% from 4.9% as the participation rate increased slightly on the month to a six-month high. The average earnings data was in line with expectations with a 0.2% monthly increase and an annual increase of 2.6% from 2.4% previously.
Hillary Clinton was perceived as the winner once again in last night’s debate vs. Republican candidate Trump. Risk appetite seems to have awoken after market participants seem to now believe that Trump’s presidential journey is winding to a close.
Mario Draghi stated that Eurozone interest rates would remain depressed until there’s a convincing increase in economic growth, adding that speculating on monetary policy tightening would be a mistake. EURGBP has so far shed around 4 cents and is now attempting to consolidate around the 1.1100 mark.
The US market is closed for Columbus Day, and relatively thin economic agenda from UK and Eurozone seems unlikely to provide any momentum.
Data to watch: 7am German Import, Exports, Trade Balance & Current Account. 12.01am tomorrow, UK August BRC Like for Like Retail Sales year on year.