This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/07/pound-dollar-brexit-politicians-city-stock-markets-retail-live
The article has changed 15 times. There is an RSS feed of changes available.
| Version 12 | Version 13 |
|---|---|
| Lagarde urges speedy Brexit deal as City sees pound hitting new lows – as it happened | |
| (about 1 hour later) | |
| 4.41pm BST | |
| 16:41 | |
| Afternoon summary: Pound fears grip City as Lagarde urges action | |
| Time for a recap, after another busy day of financial twists and turns. | |
| Britain has been threatened with the spectre of the pound falling towards parity with the US dollar. | |
| Mohamed El-Erian of investment giant Allianz warned that sterling could hit record lows, unless politicians get their act together and negotiate a new agreement with the EU. | |
| He told Reuters that: | |
| The future value of sterling is a function of how and how quickly the structural uncertainty is resolved – if Plan B is delayed and/or it doesn’t involve much of a free trade setup with the EU, it is not inconceivable for sterling to head to parity with the US dollar. | |
| Three investment banks have warned that the pound will fall to $1.20, or lower, this year. | |
| Christine Lagarde, head of the IMF, has also weighed in. She fears Britain’s economy will suffer long-term damage if the uncertainty following last month’s EU referendum isn’t resolved soon. | |
| Senior bosses at the world’s largest banks have promised to help London retain its place as a global financial hub.... | |
| ...But the boss of JP Morgan has reiterated that thousands of London-based jobs will be lost if the City loses its ‘passport’ into the UK. | |
| UK consumers have been warned that the slump in the pound will soon hit their purses and wallets: | |
| Related: Computers and chocolate set to get pricier after Brexit vote | |
| There are also several signs that the UK economy is weakening: | |
| Related: Property fund turmoil continues as two more firms reveal cut in value | |
| It’s been a better day in the market, though. The pound clawed its way above $1.30, although it has now dipped back towards yesterday’s 31-year lows. | |
| Are we calling it the Leadsom rally yet? pic.twitter.com/9bfXz8PX7l | |
| And Europe’s stock markets have just closed with gains across the board. | |
| In London, the FTSE 100 index has jumped by 1.1% to 6533, a gain of 70 points. The smaller FTSE 250 rose by 1.66%. | |
| That’s all for today. Thanks for reading and commenting. Goodnight. GW | |
| 4.36pm BST | |
| 16:36 | |
| Worrying signs from Germany: | |
| Survey by German Chamber of Commerce: 35% of German co.s with branches in UK planning to reduce capital spend; 26% planning to reduce staff | |
| 3.59pm BST | 3.59pm BST |
| 15:59 | 15:59 |
| Barclays fears rancorous Brexit negotiations | Barclays fears rancorous Brexit negotiations |
| Analysts at Barclays have slashed their growth forecast for next year, predicting that the Brexit vote will cause “prolonged uncertainty and financial stress.” | Analysts at Barclays have slashed their growth forecast for next year, predicting that the Brexit vote will cause “prolonged uncertainty and financial stress.” |
| They now expect the UK economy to contact by 0.4% next year, down from growth of 1.8% previously. They also cut their euro area growth forecast to 0.6%, down from 1.7%. | They now expect the UK economy to contact by 0.4% next year, down from growth of 1.8% previously. They also cut their euro area growth forecast to 0.6%, down from 1.7%. |
| Barclays also see several flashpoints in the months ahead which could even put the future of the eurozone in doubt again: | Barclays also see several flashpoints in the months ahead which could even put the future of the eurozone in doubt again: |
| For example, the UK-EU exit negotiations could turn rancorous. And market upheaval could be even greater if an EMU country were to actively question EU membership; redenomination risk could return. | For example, the UK-EU exit negotiations could turn rancorous. And market upheaval could be even greater if an EMU country were to actively question EU membership; redenomination risk could return. |
| Hence, investors are likely to pay close attention to the October referendum on constitutional reforms in Italy, as well as the general elections in the Netherlands, France and Germany in 2017. Any outcome that helps anti-EU political parties would likely be poorly received by markets | Hence, investors are likely to pay close attention to the October referendum on constitutional reforms in Italy, as well as the general elections in the Netherlands, France and Germany in 2017. Any outcome that helps anti-EU political parties would likely be poorly received by markets |
| 3.20pm BST | 3.20pm BST |
| 15:20 | 15:20 |
| NIESR: UK economy contracted in June | NIESR: UK economy contracted in June |
| Newsflash: The British economy appears to have contracted last month. | Newsflash: The British economy appears to have contracted last month. |
| New figures from the National Institute Of Economic and Social Research indicate that the economy was weakening, even before Britons headed to the polls. | New figures from the National Institute Of Economic and Social Research indicate that the economy was weakening, even before Britons headed to the polls. |
| NIESR estimates that the economy grew by 0.6% in the April-June quarter, up from 0.4% in January-March. So far so good.... | NIESR estimates that the economy grew by 0.6% in the April-June quarter, up from 0.4% in January-March. So far so good.... |
| But before anyone gets the bunting out, NIERS also estimate that strong growth in April fizzled out in May, leading to the economy shrinking in June. | But before anyone gets the bunting out, NIERS also estimate that strong growth in April fizzled out in May, leading to the economy shrinking in June. |
| Jack Meaning, Research Fellow at NIESR, explains: | Jack Meaning, Research Fellow at NIESR, explains: |
| “At first glance this represents a robust rate of quarterly growth for the UK economy. However, the quarterly figure masks an important within-quarter pattern. Our monthly estimates suggest that April saw a large expansion in GDP, which then stagnated in May. | “At first glance this represents a robust rate of quarterly growth for the UK economy. However, the quarterly figure masks an important within-quarter pattern. Our monthly estimates suggest that April saw a large expansion in GDP, which then stagnated in May. |
| The estimate for June is one of an intensifying contraction across the board, but this is not enough to offset the very strong April numbers. | The estimate for June is one of an intensifying contraction across the board, but this is not enough to offset the very strong April numbers. |
| What it does suggest is that when April drops out of the 3 month calculation we should see a quick deterioration of growth, especially if the estimated contraction in June persists or accelerates into July and beyond.” | What it does suggest is that when April drops out of the 3 month calculation we should see a quick deterioration of growth, especially if the estimated contraction in June persists or accelerates into July and beyond.” |
| NIESR: UK economy expanded by 0.6% in Q2. But warns that figs largely distorted by strong numbers in April. Got much weaker in June | NIESR: UK economy expanded by 0.6% in Q2. But warns that figs largely distorted by strong numbers in April. Got much weaker in June |
| Updated | Updated |
| at 3.20pm BST | at 3.20pm BST |
| 3.07pm BST | 3.07pm BST |
| 15:07 | 15:07 |
| Fancy buying a supermarket or an office block? It could be your lucky day. | Fancy buying a supermarket or an office block? It could be your lucky day. |
| Somewhere between £3bn to £5bn of direct real estate is now up for sale, as commercial real estate funds try to generate cash to pay redemptions to investors. | Somewhere between £3bn to £5bn of direct real estate is now up for sale, as commercial real estate funds try to generate cash to pay redemptions to investors. |
| And as it is a buyers market, some assets could be sold pretty cheaply. | And as it is a buyers market, some assets could be sold pretty cheaply. |
| Investment bank Jefferies is scathing about the ‘open-ended’ funds which have invested in property on the way up. Six funds have now locked the exit doors this week; Standard Life, Aviva, M&S, Columbia, Canada Life and Henderson. | Investment bank Jefferies is scathing about the ‘open-ended’ funds which have invested in property on the way up. Six funds have now locked the exit doors this week; Standard Life, Aviva, M&S, Columbia, Canada Life and Henderson. |
| Jefferies accuses them of selling “snake oil” to retail investors, by guaranteeing liquidity while investing in a notoriously illiquid asset class. You can’t just sell a tower block in a few days, which is why redemptions are now frozen. | Jefferies accuses them of selling “snake oil” to retail investors, by guaranteeing liquidity while investing in a notoriously illiquid asset class. You can’t just sell a tower block in a few days, which is why redemptions are now frozen. |
| Jefferies analysts predict more pain ahead: | Jefferies analysts predict more pain ahead: |
| Now the virtuous cycle is turning into a vicious circle of redemptions, REIT sales, gating, discounted asset sales, lower fund valuations, and Major (Ret’d) & Mrs Smith complaining in the Sunday Times Money Section that they never read the small print and then more redemptions etc. etc. | Now the virtuous cycle is turning into a vicious circle of redemptions, REIT sales, gating, discounted asset sales, lower fund valuations, and Major (Ret’d) & Mrs Smith complaining in the Sunday Times Money Section that they never read the small print and then more redemptions etc. etc. |
| [REIT = real estate investment trusts; companies who generate an income from owning commercial property ] | [REIT = real estate investment trusts; companies who generate an income from owning commercial property ] |
| Updated | Updated |
| at 3.09pm BST | at 3.09pm BST |
| 2.36pm BST | 2.36pm BST |
| 14:36 | 14:36 |
| Newsflash: Another investment fund has cut the value of its property funds, following L&G and Foreign & Colonial. | Newsflash: Another investment fund has cut the value of its property funds, following L&G and Foreign & Colonial. |
| This time it’s CCLA, which invests money for a range of charities, religious groups and the public sector. It has lopped 4.5% off the value of its funds, which were worth £1.3bn. | This time it’s CCLA, which invests money for a range of charities, religious groups and the public sector. It has lopped 4.5% off the value of its funds, which were worth £1.3bn. |
| 2.26pm BST | 2.26pm BST |
| 14:26 | 14:26 |
| In another sign of Brexit tensions, rating agency Standard & Poor’s has revised down its opinion of several UK banks. | In another sign of Brexit tensions, rating agency Standard & Poor’s has revised down its opinion of several UK banks. |
| It has cut Barclays’ outlook to negative, from stable, and also lowered Royal Bank of Scotland to stable, from positive. | It has cut Barclays’ outlook to negative, from stable, and also lowered Royal Bank of Scotland to stable, from positive. |
| It blames “potential economic deterioration” following the EU vote, and says the UK is “entering a correction phase”, in which consumer confidence will suffer. | It blames “potential economic deterioration” following the EU vote, and says the UK is “entering a correction phase”, in which consumer confidence will suffer. |
| Updated | Updated |
| at 2.35pm BST | at 2.35pm BST |
| 2.06pm BST | 2.06pm BST |
| 14:06 | 14:06 |
| There are fresh rumblings in the UK commercial property market, where the Brexit vote continues to alarm investors. | There are fresh rumblings in the UK commercial property market, where the Brexit vote continues to alarm investors. |
| Two more funds have announced that the value of their shopping centres, office blocks and suchlike has fallen sharply in the last two weeks. | Two more funds have announced that the value of their shopping centres, office blocks and suchlike has fallen sharply in the last two weeks. |
| Legal & General cut the value of its £2.3bn property fund by 10% – following a 5% cut last week – while Foreign & Colonial cut the value of its £290m fund by 5%. | Legal & General cut the value of its £2.3bn property fund by 10% – following a 5% cut last week – while Foreign & Colonial cut the value of its £290m fund by 5%. |
| L&G also warned that it’s too early to know the full impact of the EU referendum vote. | L&G also warned that it’s too early to know the full impact of the EU referendum vote. |
| Property fund turmoil continues as two more firms reveal cut in value https://t.co/GPp9h3D0V2 | Property fund turmoil continues as two more firms reveal cut in value https://t.co/GPp9h3D0V2 |
| 1.55pm BST | 1.55pm BST |
| 13:55 | 13:55 |
| Just in: The latest US employment survey has beaten expectations. | Just in: The latest US employment survey has beaten expectations. |
| Some 172,000 new private sector jobs were created in June, some 13,000 more than expected. | Some 172,000 new private sector jobs were created in June, some 13,000 more than expected. |
| We get the main US jobs report tomorrow, the Non-Farm Payroll, and that will show if Brexit worries had any impact on hiring last month. | We get the main US jobs report tomorrow, the Non-Farm Payroll, and that will show if Brexit worries had any impact on hiring last month. |
| BREAKING: June private sector jobs rose by 172,000 vs 159,000 expected: ADP https://t.co/W9Dw3T1bpW | BREAKING: June private sector jobs rose by 172,000 vs 159,000 expected: ADP https://t.co/W9Dw3T1bpW |
| 1.45pm BST | 1.45pm BST |
| 13:45 | 13:45 |
| Christine Lagarde also warned that the global economy could suffer if Britain enters a limbo state where it delays the process of leaving the EU. | Christine Lagarde also warned that the global economy could suffer if Britain enters a limbo state where it delays the process of leaving the EU. |
| Do we have a forecast and scenario with prolonged uncertainty, total lack of clarity, no triggering of Article 50 [the official notification required to leave the EU], things staying in limbo for a long period of time? No. We don’t have that. We doubt that it would be sustainable politically, geopolitically. | Do we have a forecast and scenario with prolonged uncertainty, total lack of clarity, no triggering of Article 50 [the official notification required to leave the EU], things staying in limbo for a long period of time? No. We don’t have that. We doubt that it would be sustainable politically, geopolitically. |
| More here: | More here: |
| Lagarde warns Trump-style protectionism would hit world economy | Lagarde warns Trump-style protectionism would hit world economy |
| 1.01pm BST | 1.01pm BST |
| 13:01 | 13:01 |
| Lagarde: We need clarity about UK's Brexit plans | Lagarde: We need clarity about UK's Brexit plans |
| Christine Lagarde, head of the International Monetary Fund, has called on Britain to resolve its relationship with the European Union quickly, to limit the economic damage of Brexit. | Christine Lagarde, head of the International Monetary Fund, has called on Britain to resolve its relationship with the European Union quickly, to limit the economic damage of Brexit. |
| She’s echoing Mohamed El-Erian’s warning that uncertainty will hurt the UK economy. | She’s echoing Mohamed El-Erian’s warning that uncertainty will hurt the UK economy. |
| In an interview with the Financial Times, Lagarde says: | In an interview with the Financial Times, Lagarde says: |
| “We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making. | “We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making. |
| The IMF believes could UK cushion the impact of leaving the EU by agreeing a Norway-style agreement (basically getting access to the single market, but also agreeing to EU laws and freedom of movement). That would only cut 1.5% off GDP growth by 2019 | The IMF believes could UK cushion the impact of leaving the EU by agreeing a Norway-style agreement (basically getting access to the single market, but also agreeing to EU laws and freedom of movement). That would only cut 1.5% off GDP growth by 2019 |
| However, if the UK clatters out of the EU without a new trade deal, it will revert to standard WTO tariffs - meaning the economy would be 4.5% smaller than otherwise by the end of the decade. The boss of the WTO has already warned that this would cost consumers £9bn per year. | However, if the UK clatters out of the EU without a new trade deal, it will revert to standard WTO tariffs - meaning the economy would be 4.5% smaller than otherwise by the end of the decade. The boss of the WTO has already warned that this would cost consumers £9bn per year. |
| It’s not clear when the UK can deliver the clarity which Lagarde is seeking. This morning, foreign secretary Philip Hammond told MPs that the government simply isn’t in a position to start ‘substantive negotiations’ with Brussels. | It’s not clear when the UK can deliver the clarity which Lagarde is seeking. This morning, foreign secretary Philip Hammond told MPs that the government simply isn’t in a position to start ‘substantive negotiations’ with Brussels. |
| Foreign Secretary Philip Hammond says the U.K. is "not in a position to begin substantive negotiations immediately" on its divorce with EU | Foreign Secretary Philip Hammond says the U.K. is "not in a position to begin substantive negotiations immediately" on its divorce with EU |
| 12.23pm BST | 12.23pm BST |
| 12:23 | 12:23 |
| The pound has broken back over the $1.30 mark, away from yesterday’s 31-year low of $1.28 (and further away from dollar parity, of course). | The pound has broken back over the $1.30 mark, away from yesterday’s 31-year low of $1.28 (and further away from dollar parity, of course). |
| It appears that some calm has returned to the markets, after some wild days. | It appears that some calm has returned to the markets, after some wild days. |
| But analysts are expecting sterling to keep dropping. | But analysts are expecting sterling to keep dropping. |
| fastFT have the details: | fastFT have the details: |
| Deutsche Bank believes that sterling is in line to fall as far as $1.15, while HSBC has set $1.20 as its target for the end of the year. Goldman Sachs has a three-month target of $1.20. | Deutsche Bank believes that sterling is in line to fall as far as $1.15, while HSBC has set $1.20 as its target for the end of the year. Goldman Sachs has a three-month target of $1.20. |
| Sterling gets its mojo back; Over $1.30 (just) https://t.co/AIOqCixmQT pic.twitter.com/z6tmmUE7iX | Sterling gets its mojo back; Over $1.30 (just) https://t.co/AIOqCixmQT pic.twitter.com/z6tmmUE7iX |
| 12.12pm BST | 12.12pm BST |
| 12:12 | 12:12 |
| Bank chiefs pledge to protect the City | Bank chiefs pledge to protect the City |
| Five top executives from the biggest international banks based in London have pledged to work together to protect the City following the Brexit vote | Five top executives from the biggest international banks based in London have pledged to work together to protect the City following the Brexit vote |
| Bosses from Goldman Sachs, Standard Chartered, Bank of America Merrill Lynch, Morgan Stanley and JP Morgan issued the promise, after a meeting with chancellor George Osborne. | Bosses from Goldman Sachs, Standard Chartered, Bank of America Merrill Lynch, Morgan Stanley and JP Morgan issued the promise, after a meeting with chancellor George Osborne. |
| They cite Britain’s “brilliant workforce” and “stable legal systems” as key assets. | They cite Britain’s “brilliant workforce” and “stable legal systems” as key assets. |
| Here’s the statement: | Here’s the statement: |
| Britain’s decision to leave the EU clearly presents economic challenges which we are determined to work together to meet. | Britain’s decision to leave the EU clearly presents economic challenges which we are determined to work together to meet. |
| We will also work together to identify the new opportunities that may now become available so that Britain remains one of the most attractive places in the world to do business. | We will also work together to identify the new opportunities that may now become available so that Britain remains one of the most attractive places in the world to do business. |
| One of Britain’s key economic strengths is that it is a world leading financial centre. | One of Britain’s key economic strengths is that it is a world leading financial centre. |
| It has one of the most stable legal systems in the world, a brilliant workforce and deep, liquid capital markets unmatched anywhere else in Europe, all of which are underpinned by world class regulators. | It has one of the most stable legal systems in the world, a brilliant workforce and deep, liquid capital markets unmatched anywhere else in Europe, all of which are underpinned by world class regulators. |
| In recent years it has established itself as a global hub for renminbi, rupee, Islamic finance and green finance, as well as leading in new markets such as FinTech. | In recent years it has established itself as a global hub for renminbi, rupee, Islamic finance and green finance, as well as leading in new markets such as FinTech. |
| Today we met and agreed that we would work together to build on all this with a common aim to help London retain its position as the leading international financial centre. | Today we met and agreed that we would work together to build on all this with a common aim to help London retain its position as the leading international financial centre. |
| It’s signed by: | It’s signed by: |
| Updated | Updated |
| at 3.56pm BST | at 3.56pm BST |
| 11.30am BST | 11.30am BST |
| 11:30 | 11:30 |
| According to the financial markets, there’s a high chance that the Bank of England will cut interest rates to new record lows next week. | According to the financial markets, there’s a high chance that the Bank of England will cut interest rates to new record lows next week. |
| Ben Brettell of investment firm Hargreaves Lansdown has drilled down into the interest-rate swaps traded in the City, and reports that they imply: | Ben Brettell of investment firm Hargreaves Lansdown has drilled down into the interest-rate swaps traded in the City, and reports that they imply: |
| He explains: | He explains: |
| Initially August had looked more likely, but with economic data deteriorating and markets still nervous, it now looks probable the Monetary Policy Committee will adjudge that immediate action is warranted. | Initially August had looked more likely, but with economic data deteriorating and markets still nervous, it now looks probable the Monetary Policy Committee will adjudge that immediate action is warranted. |
| Updated | Updated |
| at 11.34am BST | at 11.34am BST |