Sterling down 0.5% on the week and now unchanged compared to a month ago versus both Euro & USD..
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| Allow me to start today's report on a positive, even though GBP hasn't responded at all to the news this morning..
The UK economy has continued to accelerate over the summer and at a much faster pace than expected.
The market was anticipating pretty much the same result as last month (51.5), but a huge reading of 53 was the outcome. As always, the economic growth was pushed mainly by services which too exceeded expectations. Both outcomes were very surprising and very strong, especially when compared to the Euro-Zone's results today.
Things continue to improve in the Euro-Zone with manufacturing now finally out of recessionary numbers after 38-months.
A number of at least 50 on a PMI reading means growth. The manufacturing figure of 50.5 was largely thanks to Germany and easily beats last month's 49.8. The overall economic picture shows an improvement from 50.9 to 51.1, but now lags heavily the UK number of 53.
I know these numbers don't mean much to most of you, but believe me the UK result is very good news.
The reason the Pound hasn't moved on the news today is because of the UK inflation report yesterday. Core inflation, headline inflation and food inflation all rose further than anticipated last month with total workforce numbers decreasing for the 11th month in a row.
Money markets have slashed the chances of one more UK interest rate cut this year, BUT more importantly hiked the chances of emergency rate cuts next year.
This means investors are nervous for the UK as it heads into Q4 and 2026. Stagflation is the concern here and as always in financial markets, what the future may hold matters most. |
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