5th November 2019 Market Update
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🇬🇧 GBP – Like for like sales in October saw a 0.1% increase, as UK retailers pulled out the stops on promotional activity to boost sales. The marginal increase did little to help the pound however, as sterling struggled against most major currencies. The slump yesterday can likely be attributed to growing political uncertainty in the UK, and a slowdown in construction growth. Against the dollar, the pound is far from its benchmark high of 1.30, and seems to be struggling to find any route to higher levels. That being said, the pound is trading higher this morning, as markets begin to take positions following election results.
In regards to election campaigns, Jeremy Corbyn begins to target the most pro-leave areas of the country in a bid take on the conservatives over Brexit. Corbyn will today tell voters in Harlow that he will get Brexit sorted in 6 months, through a second referendum. Boris Johnson has hit back at the idea, saying a second referendum would “destroy all faith in our democratic process” With just over five weeks until Britain heads to the polls on Dec. 12, the ruling Conservative party is leading in the polls and the risk of a “no-deal” Brexit is considered to have been reduced.
🇪🇺 EUR – Manufacturing figures for the EU gave out better than expected this morning, giving the Euro a boost in the start to the week. Similarly as for the UK, manufacturing has suffered in major EU countries such as Germany, which has previously weighed down on the Euro.
As Mario Draghi’s era has come to an end, Christine Lagarde spoke for the first time in Berlin at a time when policy makers at the ECB are split over dwindling stimulus tools and the economy on the brink of recession. She took the opportunity to tell governments, including Germany’s, to do more to boost demand.
🇺🇸 USD – The initial “phase one” trade pact with China appears to be coming to a conclusion and is likely to be signed around mid-November, although a finite date is still in question. The apparent progress here has helped the US Dollar to trace back losses against other safe haven currencies. Both countries have slapped tariffs on each other’s goods in a trade war that has dragged on for 16 months and raised the spectre of a global recession. Any progress in resolving the row could potentially boost the dollar and riskier assets, ease concern about the economic outlook and reduce the need for aggressive monetary easing.
GBP: Shop slash prices in bid to lure shoppers
EUR: Can Eurozone retail sales keep Euro momentum going?
USD: Improving relations with China has positive impact on USD
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