31st August 2017 Market Update
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🇬🇧 GBP – In the UK we saw mortgage approvals tick slightly higher than forecast with the final figure being 69,000, beating the 66,000 forecast. Sterling trended slightly higher on the euro but is still at historically low level. Consumers in the UK will also have to brace themselves for higher fruit and vegetable prices as Autumn nears which will certainly have an effect on already cash strapped consumers dealing with the higher import costs due to GBP weakness.
On the Brexit front we have had no real news and things are not moving at the required pace all parties were hoping for.
🇪🇺 EUR – In the Eurozone we have seen economic confidence rise to the highest level in ten years. All major euro area countries besides Germany have showed increased confidence in the economy. Germany being the largest exporter in Europe is concerned about the current strength of the euro. ECB policy makers led by Mario Draghi will soon get together to discuss if the economic stimulus should start winding down or not. German preliminary CPI came in as expected at 0.1% yesterday.
🇺🇸 USD – In the US we saw GDP increase at an annual rate of 3.0% in the second quarter of 2017. This is a big increase compared to the 1.2% in the first quarter of 2017. The is the quickest the economy has grown in the last two years which could bode well for another rate hike towards the end of the year and is also some good news for Trump. The latest figures helped the dollar strengthen against a basket of currencies on Wednesday.
The ADP non-farm employment change was released above expectations at 237,000 which beat expectations by 42,000 maintaining the dollar’s momentum.
On another note Donald Trump has his hands full with the Houston flooding and the continuous dangerous posturing of North Korea. Events like this certainly have an effect on the markets and confidence throughout the world.
8.25am – MPC member Saunders speaks
10.00am – CPI flash estimate y/y & Core CPI flash estimate y/y
13.30pm – GDP m/m
13.30pm – Unemployment claims & personal spending m/m
Our View: The UK continues to lag behind compared to the US economy as growth has slowed to a crawl as UK consumers continue to rein in their spending. With Brexit negotiations taking time, many believe we won’t see much improvement going forward.
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