Global market decline once again hurts the £
For those of you that have been with us for a while will know that Sterling has been following the performance of stock markets since the pandemic. The Pound has been labelled as a 'risk-on imposter' by some, meaning when global sentiment is positive it gains value, but is vulnerable to a reverse in fortunes if sentiment turns negative as it has done this week.
Following weak data from China and growing concerns of the delta variant in Asia on Monday, investor mood has once again turned sour. Usually this means a bout of weakness for the £ (as seen on many cases previously) and whilst there has been a rather significant drop on £-$ rates (-1%), £-€ hasn't suffered too badly (-0.2%).
The better than expected UK jobs number yesterday means over the medium-term GBP is well supported. The unemployment rate fell from 4.8% to 4.7%, 95,000 more people are in a job in Q2 up from 25,000 in Q1, a record number of job vacancies has been created and average earnings/bonuses also easily beat expectations. More vacancies, more people in jobs and higher wages are all very good news for the economy and subsequent £.