Sterling Expectations fall on Rates and Brexit
August 22nd: Highlights
- Banks downgrade forecasts for economy and pound
- Brexit talks on future relationship won’t start in October
- U.K. Government trying to catch up
Outlook for pound worsening
Business investment is slowing at an alarming rate as companies place any plans for expansion on hold until the picture becomes clearer in whatever way that materializes. The U.K. economy already the weakest in G10 is in danger of falling behind as the rest of the global economy finally emerges from the last vestiges of the global financial crisis.
The pound has now fallen through major support against the single currency at 0.9150 and could see further falls as market activity returns to normal.
House prices which are a mainstay of consumer confidence fell by 0.9% month on month in August although year on year growth was at 3.1%. If house prices start to fall as the Autumn approaches and the gap between wages and prices widens, the economy could easily fall back towards recession.
Davis Ignoring EU conditions for post-Brexit agreement
The U.K. has staunchly refused to budge on the issue of the rights of EU citizens remaining in the U.K. following Brexit. It has made (in the shape of Boris Johnson’s “go whistle comments and Eur 40 bio. plan) derisory financial offers and plans to make no change to the land border between the U.K. and Ireland, a decision that is totally opposite to what the EU will deem necessary.
The EU is clearly dissatisfied with the progress that is being made since its chief negotiator, Michel Barnier has now said that the talks on trade and customs won’t start in October as there hasn’t been sufficient progress on the three demands.
The EU and U.K. are handling Brexit in a totally separate way. The EU, driven of course as it is by hordes of bureaucrats, appears methodical in its methods, having a clear agenda and timetable. The U.K., as characterizes this Government is haphazard and lacking in both vision and purpose.
Jackson Hole Symposium Starts with Draghi Speech
The Eurozone which was beset by debt problems and a banking crisis caused by the financial crash is emerging stronger and is now rightly considered as a major part of global trade to match China and the U.S.
Sr. Draghi is at the forefront of global financial regulation working closely with BoE Governor Mark Carney in Carney’s role as Chairman of the G20’s Stability Board a position in which he was preceded by Draghi.
Both Carney and Draghi will stand down from the Central Bank roles in the next two years and both will be hard to follow.
Have a great day!
About Alan Hill
Alan has been involved in the FX market for more than 25 years and brings a wealth of experience to his content. His knowledge has been gained while trading through some of the most volatile periods of recent history. His commentary relies on an understanding of past events and how they will affect future market performance.”