- Sterling slips after IMF growth downgrade
- May to meet Merkel in start of Brexit discussions
- UK unemployment has the potential to boost Sterling
The International Monetary Fund cut its UK growth forecast for next year from 2.2% to 1.3%. They cited the decision to leave the EU as their reason for cutting and their revised forecast would bring the UK into line with Germany; the EU country most affected by Brexit. I am not saying they copied anything or plagiarised anything, I'm just saying it is very similar. I would add a word of warning though; the IMF is notoriously poor at forecasting. Nonetheless, Sterling did dip on the announcement.
Yesterday's other UK data was much as I suggested in yesterday's report. The inflation number was marginally higher at 0.5% but didn't cause too much surprise. The Pound has started to show a little resilience and has even made some gains but the nervousness remains. The currency that Sterling is struggling against is the US Dollar which remains strong on the back of improved commodity prices, safe haven flows into US treasuries and an ebullient stock market. The Euro – US Dollar rate also looks vulnerable and seems set to fall from the current support around $1.10. A drop to $1.08 wouldn't be at all surprising.
Today's big data comes in the form of UK unemployment figures as well as average earnings calculations. Earnings levels have been picking up but the pace of new job growth has slowed and today's figures are likely to reinforce that picture. Sterling would benefit is earnings rose more than 2.3% and if there were significant numbers of new jobs created. SO be ready for that.
Other than these items, there isn't a lot going on in the markets. It's early days for the New UK Government team and they are finding their feet but the real business of Brexit negotiation starts today when PM Theresa May meets German Chancellor Angela Merkel. I know we would all love to be flies on the wall for that one.
And we are often warned not to leave our dogs in cars during hot weather. The greenhouse effect of the car's glass can produce death inducing heat within the car. One woman in Watford has clearly not seen the messages. She left her child in the car in direct sunlight and disappeared off for a full half hour, leaving passers-by to alert the police who, after several tannoy announcements for the mother to return, eventually released the child. The mother, who had neglected her child, endangered its life and parked in a disabled bay, was given what is described as 'a ticking off' by the police. So that'll fix it then.
- I was set the task of making a yacht out of iron. That was a hardship.
- Captain Jack Sparrow bought some cookware whist in Jamaica. It was Pyrex of the Caribbean
- I'm on a whiskey and tequila diet. I've lost four days already.
- I have kleptomania but don't worry, I’ve been taking something for it
Q) What do you call an alligator wearing a vest? A) An Investigator
FX Research by David Johnson
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