The pound continued to recover through the morning, up +0.40% by mid afternoon, to $1.3137, but down from an intraday $1.3184 surge. Against the pound the euro was almost -0.50% lower at 0.8931. Some of sterling’s new bullishness was driven by sentiment over a new – the fifth – bout of EU-UK Brexit negotiations. However sterling is down more than -1.10% on the week still.
The EU Commission’s chief spokesperson Margaritis Schinas told the media the Commission remained underwhelmed. “There has been, so far, no solution found on step one, which is the divorce proceedings, so the ball is entirely in the UK’s court for the rest to happen,” Schinas said.
There have been some reports that claim the pound could surge by as much as +2% should Theresa May fire Boris Johnson, putting a possible leadership fight aside, at least for the moment.
US stocks continued to power higher. At 4pm the Dow was up +0.03% at 22,780.88 while the Nasdaq was up 6,592.4, also up +0.03%. The higher pound dented the FTSE 100, down 15 points at 7,507 at close of business tonight. The main riser was Reckitt Benckiser, up +1.50% while Anglo American and Rio Tinto took fresh falls, down -3.38% and -2.24% respectively.
- UK FTSE 100 7,507 -0.20%
- Dow 22,772.2 -0.01%
- S&P 500 2,547.65 -0.07%
- Nasdaq 6,593.13 +0.04%
- Nikkei 225 20,690.71 +0.30%
- DAX 12,966.74 +0.08%
- CAC 40 5,355.36 -0.08%
- Gold 1,282.30 +0.58%
- Oil WTI 49.39 +0.20%
ONS botches key inflation measure
There were some sheepish faces at the Office of National Statistics earlier this morning. The ONS admitted it had got its sums wrong on a crucial labour cost measure. The new corrected ONS version shows UK unit labour costs expanding at 2.4% in the second quarter, not 1.6% as put out last week.
This mistake “was due to income data from the second estimate of GDP being using instead of data from quarterly national accounts," the ONS said.
The Bank of England’s Monetary Policy Committee uses labour cost data to understand how inflation impacts on the UK economy. Bank of England governor Mark Carney has heavily hinted that rates will rise following its November meeting despite consumer spending power being eroded by inflation – still.