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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/oct/05/brexit-fears-pound-lows-dollar-euro-service-sector-imf-business-live
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| Version 0 | Version 1 |
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| Brexit recession fears fade as service sector beats forecasts – Business Live | |
| (35 minutes later) | |
| 9.38am BST | |
| 09:38 | |
| UK Services sector beats forecasts | |
| Breaking: Britain’s services sector grew faster than expected last month, as firms shake off the shock of June’s Eu referendum. | |
| The Service Sector PMI, produced by data firm Markit, has come in at 52.6. | |
| That shows slightly slower growth than August (52.9), but comfortably ahead of estimates. | |
| Markit reports that: | |
| Service sector firms reported that new business rose at the fastest pace since February, as customer enquiries picked up and confidence recovered. | |
| There was also “rising demand from overseas clients” linked to the weak pound. | |
| However, there are also worries that the slump in sterling is driving up import costs. | |
| Markit says: | |
| The UK service sector continued to recover from July’s EU referendum-induced shock, | |
| However, future expectations remained very low by historical standards and the survey recorded the sharpest increase in service sector input prices in over three-and-a-half years. | |
| More to follow.... | |
| Updated | |
| at 9.39am BST | |
| 9.29am BST | |
| 09:29 | |
| Britain’s car industry seems to have ridden out the Brexit storm, so far anyway. | |
| New car registrations in the UK rose 1.6% in September to hit a new record, according to new data from the Society of Motor Manufacturers and Traders. | |
| But SMMT chief executive Mike Hawes warns that the industry could yet be damaged: | |
| “The ability of the market to maintain this record level of demand will depend on the ability of government to overcome political uncertainty and safeguard the conditions that underpin consumer appetite” | |
| 9.17am BST | |
| 09:17 | |
| Report: Hard Brexit could cost 70,000 City jobs | |
| How bad would a ‘Hard Brexit’ be? | |
| Well, according to a new report, 70,000 financial services jobs could be lost if the UK leaves the single market. Up to £10bn of tax revenue could be wiped out too -- if British firms lost the ability to sell services across the European single market. | |
| The key is whether Britain retains its ‘passporting’ rights, which currently allow City firms to operate in every EU country without separate licences or offices on the ground. | |
| The report, by consultancy group Oliver Wyman for TheCityUK lobby group, says that Britain would only suffer a ‘modest reduction’ in activity, if it retained access to the single market. | |
| In this scenario, revenues are predicted to decline by up to £2BN (2% of total wholesale and international business), 4,000 jobs would be at risk, and tax revenues would fall by less than £0.5BN per annum. | |
| However, losing access to the single market would be much more serious ... | |
| Under conditions where the UK moves to a third country arrangement with the EU, without any regulatory equivalence and its relationship with the EU is defined by terms set out under the World Trade Organization, up to 50% of EU-related activity (£20BN in revenue) and an estimated 35,000 jobs could be at risk, along with £5BN of tax revenues per annum. | |
| When taking into consideration the knock-on impact to the whole financial services ecosystem – the possibility of shifting of entire business units, or the closure of lines of business due to increased costs it could almost double the effect of Brexit. | |
| The Conservatives are promising a hard line on immigration -- so it’s hard to see how they can restrict the movement of people into the UK, while retaining the movement of capital out of it... | |
| Wednesday's i front page:'British jobs for British workers'#tomorrowspaperstoday #bbcpapers pic.twitter.com/CUkC6b82MB | |
| 9.08am BST | 9.08am BST |
| 09:08 | 09:08 |
| Eurozone private sector growth hits 20-month low | Eurozone private sector growth hits 20-month low |
| Just in: growth in the eurozone’s private sector slowed in September, suggesting Europe’s economy may have hit a soft patch. | Just in: growth in the eurozone’s private sector slowed in September, suggesting Europe’s economy may have hit a soft patch. |
| The monthly Eurozone Service sector PMI, from Markit, has dropped to 52.2, from 52.8 in August. That shows the slowest growth in activity since December 2014. | The monthly Eurozone Service sector PMI, from Markit, has dropped to 52.2, from 52.8 in August. That shows the slowest growth in activity since December 2014. |
| And the wider ‘composite’ measure, including manufacturing, shows growth slowed to its weakest since January 2015. | And the wider ‘composite’ measure, including manufacturing, shows growth slowed to its weakest since January 2015. |
| Growth picked up in France (hurrah!), but dipped in Germany, Ireland and Spain (boo) | Growth picked up in France (hurrah!), but dipped in Germany, Ireland and Spain (boo) |
| 8.59am BST | 8.59am BST |
| 08:59 | 08:59 |
| It’s fairly unusual for a party conference to move the currency markets. | It’s fairly unusual for a party conference to move the currency markets. |
| But there’s no doubt that the news from the Conservative’s meet-up in Birmingham this week has weakened the pound. | But there’s no doubt that the news from the Conservative’s meet-up in Birmingham this week has weakened the pound. |
| Jeremy Cook of World First, the currency trading firm, says: | Jeremy Cook of World First, the currency trading firm, says: |
| It’s another day and another set of fresh post-Brexit lows for sterling against the majority of its trade partners. Trade weighted sterling has been lower than it is now – following the UK’s withdrawal from the ERM in the early 90s and as the Global Financial Crisis hit in 2008 – but Britain’s exporters must be praying that this Conservative Party Conference lasts another 6 weeks. | It’s another day and another set of fresh post-Brexit lows for sterling against the majority of its trade partners. Trade weighted sterling has been lower than it is now – following the UK’s withdrawal from the ERM in the early 90s and as the Global Financial Crisis hit in 2008 – but Britain’s exporters must be praying that this Conservative Party Conference lasts another 6 weeks. |
| 8.43am BST | 8.43am BST |
| 08:43 | 08:43 |
| Has Tesco turned the corner? Shares in the supermarket chain have jumped by 8% this morning, after its latest financial results. | Has Tesco turned the corner? Shares in the supermarket chain have jumped by 8% this morning, after its latest financial results. |
| Investors are cheering a chunk rise in operating profits (but not in pre-tax levels), from £372m to £515m, and sales growth across the business. On the downside, the pension deficit has more than doubled this year.... | Investors are cheering a chunk rise in operating profits (but not in pre-tax levels), from £372m to £515m, and sales growth across the business. On the downside, the pension deficit has more than doubled this year.... |
| 8.41am BST | 8.41am BST |
| 08:41 | 08:41 |
| Britain’s currency has effectively been devalued by 15% against major rivals since June 23rd. | Britain’s currency has effectively been devalued by 15% against major rivals since June 23rd. |
| Total fall in sterling/dollar from the referendum night high to today's low ($1.2685) is -15.56%. -18.8% in yen, -14% in euro. | Total fall in sterling/dollar from the referendum night high to today's low ($1.2685) is -15.56%. -18.8% in yen, -14% in euro. |
| 8.27am BST | 8.27am BST |
| 08:27 | 08:27 |
| Some analysts are predicting the pound could suffer further shunts downwards, as the EU exit negotiations begin in earnest. | Some analysts are predicting the pound could suffer further shunts downwards, as the EU exit negotiations begin in earnest. |
| In today’s Financial Times, Koon Chow, macro and forex strategist at UBP, says: | In today’s Financial Times, Koon Chow, macro and forex strategist at UBP, says: |
| “The pound’s drop is likely to be a series of spaced out depreciations, with the trigger for weakness being each piece of new information on the economic sacrifice that the UK government is willing to take on the path to Brexit.” | “The pound’s drop is likely to be a series of spaced out depreciations, with the trigger for weakness being each piece of new information on the economic sacrifice that the UK government is willing to take on the path to Brexit.” |
| Pound slipping again this morning, GBPUSD below 1.2700. Has now lost 15% since 23 June high: pic.twitter.com/27uB5vOVvW | Pound slipping again this morning, GBPUSD below 1.2700. Has now lost 15% since 23 June high: pic.twitter.com/27uB5vOVvW |
| 8.13am BST | 8.13am BST |
| 08:13 | 08:13 |
| London’s stock market has also dropped in early trading, even through a weak pound is good for some companies. | London’s stock market has also dropped in early trading, even through a weak pound is good for some companies. |
| The FTSE 100 index, which nearly hit a record high yesterday, has dropped by 18 points to 7056. | The FTSE 100 index, which nearly hit a record high yesterday, has dropped by 18 points to 7056. |
| And the UK-focused FTSE 250 has also dipped by around 0.2% | And the UK-focused FTSE 250 has also dipped by around 0.2% |
| 8.09am BST | 8.09am BST |
| 08:09 | 08:09 |
| Analyst: Brexit fears may be bone deep | Analyst: Brexit fears may be bone deep |
| Sterling is continuing its “slippery decline” this week as ongoing Brexit uncertainties haunt investor attraction towards the currency. | Sterling is continuing its “slippery decline” this week as ongoing Brexit uncertainties haunt investor attraction towards the currency. |
| So says FXTM research analyst Lukman Otunuga, who reckons investors aren’t taking comfort from recent solid economic data. | So says FXTM research analyst Lukman Otunuga, who reckons investors aren’t taking comfort from recent solid economic data. |
| Brexit jitters may be bone deep consequently ensuring the Sterling remains depressed until the article 50 invoke date. | Brexit jitters may be bone deep consequently ensuring the Sterling remains depressed until the article 50 invoke date. |
| Although sentiment towards the UK economy continues to be uplifted as domestic data repeatedly beats, the persistent uncertainty and unknowns over how the Brexit negotiations will take place have seriously soured investor appetite towards the Sterling. | Although sentiment towards the UK economy continues to be uplifted as domestic data repeatedly beats, the persistent uncertainty and unknowns over how the Brexit negotiations will take place have seriously soured investor appetite towards the Sterling. |
| 8.04am BST | 8.04am BST |
| 08:04 | 08:04 |
| This chart shows how sterling has hit new 31-year lows this morning, below $1.27. | This chart shows how sterling has hit new 31-year lows this morning, below $1.27. |
| 8.00am BST | 8.00am BST |
| 08:00 | 08:00 |
| The pound has now lost almost three cents against the US dollar this week (and it’s only Wednesday morning). | The pound has now lost almost three cents against the US dollar this week (and it’s only Wednesday morning). |
| Theresa May knocked the wind out of sterling on Sunday, when she announced she’d trigger article 50 in March 2017, raising the chances of a hard break from the EU. | Theresa May knocked the wind out of sterling on Sunday, when she announced she’d trigger article 50 in March 2017, raising the chances of a hard break from the EU. |
| This week: Sterling decided Brexit means Hard Brexit. | This week: Sterling decided Brexit means Hard Brexit. |
| 7.51am BST | 7.51am BST |
| 07:51 | 07:51 |
| The pound is falling again.... | The pound is falling again.... |
| Fears over Britain’s looming exit from the European Union are hitting the pound again this morning. | Fears over Britain’s looming exit from the European Union are hitting the pound again this morning. |
| Sterling has slipped to a fresh 31-year low against the US dollar, falling below $1.27 for the first time since 1985. | Sterling has slipped to a fresh 31-year low against the US dollar, falling below $1.27 for the first time since 1985. |
| The pound is currently changing hands at $1.26932, down 0.25% today, extending yesterday’s selloff. | The pound is currently changing hands at $1.26932, down 0.25% today, extending yesterday’s selloff. |
| Sterling has also slid to a new five-year low against the euro in the last few minutes. It’s now worth just €1.1321, meaning one euro is worth 88.3p. | Sterling has also slid to a new five-year low against the euro in the last few minutes. It’s now worth just €1.1321, meaning one euro is worth 88.3p. |
| So what’s happening? | So what’s happening? |
| Simply put, the pound is being rattled by worries about a ‘hard Brexit’. That could see UK firms lose access to the single market as the government priorities control over immigration. | Simply put, the pound is being rattled by worries about a ‘hard Brexit’. That could see UK firms lose access to the single market as the government priorities control over immigration. |
| 7.37am BST | 7.37am BST |
| 07:37 | 07:37 |
| The agenda: UK service sector in focus | The agenda: UK service sector in focus |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Two down, one to go. After solid data from Britain’s manufacturing and construction sector this week, it’s time to find out how the services sector performed in September. | Two down, one to go. After solid data from Britain’s manufacturing and construction sector this week, it’s time to find out how the services sector performed in September. |
| Markit’s services report, released at 9.30am, is expected to show steady growth. Economists expect the PMI to come in at 52.1, down from 52.9 in August. That would show another month of solid growth, despite the shock of the Brexit vote in June. | Markit’s services report, released at 9.30am, is expected to show steady growth. Economists expect the PMI to come in at 52.1, down from 52.9 in August. That would show another month of solid growth, despite the shock of the Brexit vote in June. |
| And given that the manufacturing and construction PMIs both beat forecasts this week, perhaps services will do to. | And given that the manufacturing and construction PMIs both beat forecasts this week, perhaps services will do to. |
| Analysts at RBC Capital Markets suspect we MAY learn that Britain’s economy is growing faster than thought. | Analysts at RBC Capital Markets suspect we MAY learn that Britain’s economy is growing faster than thought. |
| The September Markit/CIPS services PMI for the UK is due this morning. So far both the manufacturing and construction sector PMIs have surprised very clearly to the upside. | The September Markit/CIPS services PMI for the UK is due this morning. So far both the manufacturing and construction sector PMIs have surprised very clearly to the upside. |
| A repeat in the services sector would reinforce the upside risks to our Q3 GDP growth forecast of -0.1% q/q which materialised after last week’s strong news on output in the service sector in July. | A repeat in the services sector would reinforce the upside risks to our Q3 GDP growth forecast of -0.1% q/q which materialised after last week’s strong news on output in the service sector in July. |
| The eurozone’s service sector gets its own healthcheck too, at 9am. | The eurozone’s service sector gets its own healthcheck too, at 9am. |
| Also coming up today... | Also coming up today... |
| The International Monetary Fund will release its Global Financial Stability Report at 1.45pm BST, highlighting the main dangers to the world economy. | The International Monetary Fund will release its Global Financial Stability Report at 1.45pm BST, highlighting the main dangers to the world economy. |
| The Eurozone sovereign debt markets could be lively, following a report that the European Central Bank has been considering whether to ‘taper’ its bond-buying stimulus programme. | The Eurozone sovereign debt markets could be lively, following a report that the European Central Bank has been considering whether to ‘taper’ its bond-buying stimulus programme. |
| Supermarket chain Tesco is reporting results this morning; profits are down by a quarter, but like-for-like sales are up 0.6% in the last six months. | Supermarket chain Tesco is reporting results this morning; profits are down by a quarter, but like-for-like sales are up 0.6% in the last six months. |
| Tesco's profits fall by 28% as it keeps up battle for market share. https://t.co/Y2zy82flZx pic.twitter.com/LRjnAXaKRS | Tesco's profits fall by 28% as it keeps up battle for market share. https://t.co/Y2zy82flZx pic.twitter.com/LRjnAXaKRS |
| And Ben Broadbent, deputy governor of the Bank of England, is giving a speech at 9.30am in London. | And Ben Broadbent, deputy governor of the Bank of England, is giving a speech at 9.30am in London. |
| We’ll be tracking all the main events through the day... | We’ll be tracking all the main events through the day... |
| Updated | Updated |
| at 8.40am BST | at 8.40am BST |