6th October 2017 Market Update
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🇬🇧 GBP – The decline in the value of the pound continues, with PMI figures in the Manufacturing and Construction sectors weighing Sterling down, even in light of services data showing expansion in this sector.
There was nothing of note from the pound yesterday, which unfortunately meant there was nothing to stop its continued fall.
Halifax house price data beat expectations this morning but has done nothing to stop the pound dropping as the overriding theme now seems to be concern of a possible leadership election in the Conservative party.
🇪🇺 EUR – The euro has been taking a back seat, with no real information of interest throughout the week. Head of the BDI, Germany’s equivalent to the UK’s CBI, put pressure on German companies operating in the UK market, to prepare for worst case scenario for the UK leaving the EU. Citing anything else would simply be ‘naïve’.
Focus is being diverted towards the ECB’s QE programme, currently standing at €60bn a month, mainly made up of government bond purchases. Their stance on whether they reduce it or not should be clear by October 26th. Recently analysts have changed their expectation from a fall to €40bn to a lower figure, but lasting for a longer period.
🇺🇸 USD – Weekly unemployment claims was released yesterday in-line with expectation, causing no real movements in the greenback.
Non-farm unemployment claims are to be released this afternoon, along with the unemployment rate and average earnings. Wednesday’s ADP job figures came in very positive, which could also mean that today’s job figures will follow suit. Thus we could see a continuation of the US dollar’s strength.
1.30pm – Nonfarm Payrolls: Expected to show only 90,000 jobs added in September
1.30pm – Unemployment Rate: Expected to remain at 4.4%
1.30pm – Average Earnings: Expected to remain at 2.5%
Our View: This week has been rather grim for the pound, as a result of disappointing data and uncertainty building over Theresa May’s future. Should there be a call for a leadership election we could well see the pound fall further as markets sense further uncertainty around Brexit negotiations.
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