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Sterling hits new two-year low as ministers prepare for no-deal Brexit – business live Sterling hits new two-year low as ministers prepare for no-deal Brexit – business live
(30 minutes later)
Connor Campbell, financial analyst at Spreadex, a spreadbetting firm, said:
It is effectively a worst-case-scenario end to July for the pound, one that sets up three months of intense Brexit anxiety heading into All Hallows’ Eve.
The decline in sterling came against the dollar, even as the US Federal Reserve prepares for an interest rate cut, usually a “headache” for owners of the greenback that would drive down its value.
Will we see the pound below $1.23 today? The day’s low point is now $1.2318 against the US dollar.
Analysis by US investment bank J.P. Morgan suggests it could get worse for the pound before it gets better.
Dialogue with the EU is ongoing but is likely to prove fruitless, and may segue into a general election and subsequent extension of Article 50 later this year. In the interim, the expectation is for him to push toward a “no deal” outcome as negotiations make little progress.
At the same time, there is a “deteriorating macro landscape” – the economy may even have contracted in the second quarter. And the UK is highly dependent on fickle foreign investors.
Layering Brexit concerns with downward momentum in the local economy and a concerning balance of payments setup should therefore allow GBP shorts to extend yet further.
The Bank of England also published its latest mortgage data on Monday, showing that banks approved lending for 66,400 house purchases in June – 800 more than the previous month and slightly more than economists had expected.
Net mortgage borrowing for the month by households was £3.7bn, close to the average of the previous three years, the Bank said. This followed a slightly weaker net flow of £2.9bn in May.
British consumer borrowing growth slowed in June to a five-year low, according to new Bank of England figures published on Monday.British consumer borrowing growth slowed in June to a five-year low, according to new Bank of England figures published on Monday.
Consumer credit, which includes borrowing such as credit cards and unsecured loans but excludes mortgages, grew at an annual rate of 5.5% year-on-year, the lowest level of growth since April 2014.Consumer credit, which includes borrowing such as credit cards and unsecured loans but excludes mortgages, grew at an annual rate of 5.5% year-on-year, the lowest level of growth since April 2014.
Consumer credit growth has fallen steadily since its late 2016 peak. While many economists believe that credit growth has been unsustainable for years – meaning a slowdown is in some ways welcome – its link to households’ willingness to spend also means that it can act as a bellwether for broader economic weakness.Consumer credit growth has fallen steadily since its late 2016 peak. While many economists believe that credit growth has been unsustainable for years – meaning a slowdown is in some ways welcome – its link to households’ willingness to spend also means that it can act as a bellwether for broader economic weakness.
The dealmaking and the weak pound (which boosts multinationals’ foreign currency earnings) have helped the FTSE 100 to a flying start to the week.The dealmaking and the weak pound (which boosts multinationals’ foreign currency earnings) have helped the FTSE 100 to a flying start to the week.
London’s benchmark index is now up by 1% at 7,628 points, after shortly after hitting its highest point since August 2018.London’s benchmark index is now up by 1% at 7,628 points, after shortly after hitting its highest point since August 2018.
On currency markets your new low point for the pound against the US dollar is $1.2324.On currency markets your new low point for the pound against the US dollar is $1.2324.
An earlier post has been corrected. Please refresh to see the updated version.An earlier post has been corrected. Please refresh to see the updated version.
Takeaway.com’s swoop for Just Eat may not be a done deal, however.Takeaway.com’s swoop for Just Eat may not be a done deal, however.
“It is a possibility that Delivery Hero could table a rival bid,” say analysts at Canaccord Genuity.“It is a possibility that Delivery Hero could table a rival bid,” say analysts at Canaccord Genuity.
Sky News previously reported that South African internet and media company Naspers was also interested in a deal, after a round of consolidation in the sector.Sky News previously reported that South African internet and media company Naspers was also interested in a deal, after a round of consolidation in the sector.
You can read the full report on the deal here:You can read the full report on the deal here:
Just Eat agrees £9bn merger with Takeaway.comJust Eat agrees £9bn merger with Takeaway.com
The Just Eat/Takeaway.com deal “makes sense in the long term,” said analysts at Barclays.The Just Eat/Takeaway.com deal “makes sense in the long term,” said analysts at Barclays.
Just Eat chief executive Peter Duffy* is understood to be on his way out of the company, which will instead be led by Takeaway.com’s boss Jitse Groen.Just Eat chief executive Peter Duffy* is understood to be on his way out of the company, which will instead be led by Takeaway.com’s boss Jitse Groen.
Barclays said:Barclays said:
Just Eat shareholders would be getting the best operator in the space to run the business – a notable shift from missed execution from management in the last few years.Just Eat shareholders would be getting the best operator in the space to run the business – a notable shift from missed execution from management in the last few years.
We are believers in the value of being a global player increasing in time, with more cash flow to fight off rising competition and tech platform synergies getting more and more relevant. This is a unique opportunity to build scale and that should benefit both parties in the long term.We are believers in the value of being a global player increasing in time, with more cash flow to fight off rising competition and tech platform synergies getting more and more relevant. This is a unique opportunity to build scale and that should benefit both parties in the long term.
*This post has been corrected to clarify that Peter Duffy is the chief executive of Just Eat, not Peter Plumb, who he replaced.*This post has been corrected to clarify that Peter Duffy is the chief executive of Just Eat, not Peter Plumb, who he replaced.
Some important details on the Just Eat deal: the new company will be headquartered in Amsterdam (the home of Takeaway.com).Some important details on the Just Eat deal: the new company will be headquartered in Amsterdam (the home of Takeaway.com).
However, it will still be listed on the London Stock Exchange, where Just Eat is currently a member of the FTSE 100, with a “significant part of its operations” in the UK.However, it will still be listed on the London Stock Exchange, where Just Eat is currently a member of the FTSE 100, with a “significant part of its operations” in the UK.
Analysts appear to have welcomed the deal. Here’s the view of Russell Pointon, of Edison Investment Research:Analysts appear to have welcomed the deal. Here’s the view of Russell Pointon, of Edison Investment Research:
The key feature of the combination of Just Eat and Takeaway.com is the limited geographic overlap between the companies. Therefore there will be limited consolidation of market shares in their combined markets.The key feature of the combination of Just Eat and Takeaway.com is the limited geographic overlap between the companies. Therefore there will be limited consolidation of market shares in their combined markets.
The companies would share best practice and know how etc. to help improve profitability to invest further behind their less profitable markets and fund the fights for market share in what is likely to be a very competitive market.The companies would share best practice and know how etc. to help improve profitability to invest further behind their less profitable markets and fund the fights for market share in what is likely to be a very competitive market.
He also points out an interesting contrast between the companies: Just Eat had annual revenues three times higher than Takeaway.com, yet still traded at a discount to its Dutch rival.He also points out an interesting contrast between the companies: Just Eat had annual revenues three times higher than Takeaway.com, yet still traded at a discount to its Dutch rival.
The sell-off in sterling is gathering pace: the pound has now lost 0.34% against the US dollar and 0.3% against the euro.The sell-off in sterling is gathering pace: the pound has now lost 0.34% against the US dollar and 0.3% against the euro.
It’s now a new low of $1.2330 for the pound against the dollar. That is now the lowest since 16 March 2017 – before new Conservative backbencher Theresa May triggered Article 50 and her disastrous decision to call a general election.It’s now a new low of $1.2330 for the pound against the dollar. That is now the lowest since 16 March 2017 – before new Conservative backbencher Theresa May triggered Article 50 and her disastrous decision to call a general election.
Newly installed foreign secretary Dominic Raab does not appear to have offered traders much succour this morning: he had more fighting talk this morning on the BBC’s Today programme.Newly installed foreign secretary Dominic Raab does not appear to have offered traders much succour this morning: he had more fighting talk this morning on the BBC’s Today programme.
He warned the EU that it needed to change its “stubborn” Brexit position to avoid a no-deal Brexit, Reuters reported.He warned the EU that it needed to change its “stubborn” Brexit position to avoid a no-deal Brexit, Reuters reported.
“We want a good deal with our EU partners,” Raab said, adding that there had been a “series of fairly stubborn positions staked out by the EU.”“We want a good deal with our EU partners,” Raab said, adding that there had been a “series of fairly stubborn positions staked out by the EU.”
Remember the “magic money tree”? The Conservative party appears to have found it, if the rash of spending promises of new Prime Minister Boris Johnson are anything to go by.Remember the “magic money tree”? The Conservative party appears to have found it, if the rash of spending promises of new Prime Minister Boris Johnson are anything to go by.
Johnson appears to be doing two things with his promises of billions for railways, tax cuts and “left behind” towns, write the Guardian’s Larry Elliott and Richard Partington: revving up the economy to gain support for his plans with a fallback that more spending could cushion the fallout of a no-deal departure.Johnson appears to be doing two things with his promises of billions for railways, tax cuts and “left behind” towns, write the Guardian’s Larry Elliott and Richard Partington: revving up the economy to gain support for his plans with a fallback that more spending could cushion the fallout of a no-deal departure.
Although framed by Johnson as spending headroom at his disposal, economists say the additional firepower is something of an illusion. Thomas Pugh, of the consultancy Capital Economics, said:Although framed by Johnson as spending headroom at his disposal, economists say the additional firepower is something of an illusion. Thomas Pugh, of the consultancy Capital Economics, said:
This isn’t money sitting in a savings account waiting to be spent. It’s more like borrowing from an overdraft where the limit is set at 2% of annual income. So spending it would result in a higher deficit and more borrowing.This isn’t money sitting in a savings account waiting to be spent. It’s more like borrowing from an overdraft where the limit is set at 2% of annual income. So spending it would result in a higher deficit and more borrowing.
You can read the full story here:You can read the full story here:
Boris Johnson says he’ll spend, but who will pay?Boris Johnson says he’ll spend, but who will pay?
The London Stock Exchange Group has also enjoyed a strong morning on the weekend’s merger talk: shares are up by 13% at the time of writing.The London Stock Exchange Group has also enjoyed a strong morning on the weekend’s merger talk: shares are up by 13% at the time of writing.
LSE boss David Schwimmer (not that one) has been in the job for just over a year, but has clearly taken a leaf from Xavier Rolet, his predecessor, in going for big deals.LSE boss David Schwimmer (not that one) has been in the job for just over a year, but has clearly taken a leaf from Xavier Rolet, his predecessor, in going for big deals.
As well as running the stock exchange and the FTSE Russell index group (which produces the FTSE 100 index), the LSE already has a lot of data services that fit in well with its trading technologies.As well as running the stock exchange and the FTSE Russell index group (which produces the FTSE 100 index), the LSE already has a lot of data services that fit in well with its trading technologies.
Refinitiv, the data company carved out of Thomson Reuters last year, runs Eikon terminals which collect trading and financial data into one place for investors.Refinitiv, the data company carved out of Thomson Reuters last year, runs Eikon terminals which collect trading and financial data into one place for investors.
At the other end of the scale from Sports Direct, Just Eat 22% shares have popped by 22% following the news of the proposed takeover by Dutch competitor Takeaway.com.At the other end of the scale from Sports Direct, Just Eat 22% shares have popped by 22% following the news of the proposed takeover by Dutch competitor Takeaway.com.
The deal will give the new company a strong presence across the EU, and will also give it the scale to take on other well resourced rivals.The deal will give the new company a strong presence across the EU, and will also give it the scale to take on other well resourced rivals.
The two companies do not compete directly in any of their major markets, so investors have long been pushing for a tie-up.The two companies do not compete directly in any of their major markets, so investors have long been pushing for a tie-up.
Takeaway.com shares have risen by 3.7% to a record high after the deal. German rival Delivery Hero has gained 4.6% on the news as well.Takeaway.com shares have risen by 3.7% to a record high after the deal. German rival Delivery Hero has gained 4.6% on the news as well.
Sports Direct shares have fallen by as much as 20% after the retailer issued an extraordinary results statement on Friday that revealed massive tax bills, poor trading and a retail industry warning.Sports Direct shares have fallen by as much as 20% after the retailer issued an extraordinary results statement on Friday that revealed massive tax bills, poor trading and a retail industry warning.
The results were delayed throughout the day on Friday, so this morning was the first chance investors had to react. They have not welcomed the news.The results were delayed throughout the day on Friday, so this morning was the first chance investors had to react. They have not welcomed the news.
Here is your guide to what is going wrong at the retailer. Warning: there’s a lot.Here is your guide to what is going wrong at the retailer. Warning: there’s a lot.
The state of Sports Direct: key points from results statementThe state of Sports Direct: key points from results statement
The FTSE 100 has gained 0.1% at the open, but European markets are struggling a bit more.The FTSE 100 has gained 0.1% at the open, but European markets are struggling a bit more.
The Euro Stoxx 600 index is down by 0.2%, led by the 0.2% declines on Germany’s Dax and France’s Cac 40.The Euro Stoxx 600 index is down by 0.2%, led by the 0.2% declines on Germany’s Dax and France’s Cac 40.
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.
Boris Johnson may have achieved his ambition of getting into 10 Downing Street last week, but financial markets have served an early reminder at the start of his first full week in office that he has a daunting task ahead of him.Boris Johnson may have achieved his ambition of getting into 10 Downing Street last week, but financial markets have served an early reminder at the start of his first full week in office that he has a daunting task ahead of him.
Sterling this morning hit a new two-year low against the US dollar, with one pound buying only $1.2358 in early trading following a weekend of no-deal Brexit tough talking from newly installed ministers. The pound weakened by 0.12% against the dollar and 0.1% against the euro.Sterling this morning hit a new two-year low against the US dollar, with one pound buying only $1.2358 in early trading following a weekend of no-deal Brexit tough talking from newly installed ministers. The pound weakened by 0.12% against the dollar and 0.1% against the euro.
Ministers are “turbo-charging” preparations to leave the EU without a deal on 31 October according to several senior cabinet ministers, reports the Guardian’s Rowena Mason. Johnson’s new cabinet Brexit fixer, Michael Gove, warned that the government was “operating on the assumption” that Britain would leave without a deal on 31 October and it was a “very real prospect”.Ministers are “turbo-charging” preparations to leave the EU without a deal on 31 October according to several senior cabinet ministers, reports the Guardian’s Rowena Mason. Johnson’s new cabinet Brexit fixer, Michael Gove, warned that the government was “operating on the assumption” that Britain would leave without a deal on 31 October and it was a “very real prospect”.
The stakes are clear for businesses in Britain. Carlos Tavares, the boss of PSA Group, used an interview last night with the Financial Times to warn that he could close the company’s factory in Ellesmere Port, which manufactures Vauxhall Astra cars, if there is a no-deal Brexit that disrupts exports from the factory. The jobs of 1,000 workers hang in the balance.The stakes are clear for businesses in Britain. Carlos Tavares, the boss of PSA Group, used an interview last night with the Financial Times to warn that he could close the company’s factory in Ellesmere Port, which manufactures Vauxhall Astra cars, if there is a no-deal Brexit that disrupts exports from the factory. The jobs of 1,000 workers hang in the balance.
It seems unlikely that the EU will be willing to make material changes to the existing deal, according to Fernando Barajas, an analyst at Creditsights, a debt rating agency. “There is little sign” that the no-deal threats have made an impact on the EU’s stance.It seems unlikely that the EU will be willing to make material changes to the existing deal, according to Fernando Barajas, an analyst at Creditsights, a debt rating agency. “There is little sign” that the no-deal threats have made an impact on the EU’s stance.
A general election in the near term now seems a high likelihood outcome.A general election in the near term now seems a high likelihood outcome.
Yet all of the political noise has not put off the dealmakers in London. Over the weekend two large mergers have come through. The FTSE 100’s Just Eat and Dutch Takeaway.com have agreed a £8.2bn all-share deal to create one of the world’s biggest takeaway delivery players. Just Eat faces renewed competition from Amazon-backed Deliveroo and Uber Eats, and some activist investors have been pushing for a deal for some time.Yet all of the political noise has not put off the dealmakers in London. Over the weekend two large mergers have come through. The FTSE 100’s Just Eat and Dutch Takeaway.com have agreed a £8.2bn all-share deal to create one of the world’s biggest takeaway delivery players. Just Eat faces renewed competition from Amazon-backed Deliveroo and Uber Eats, and some activist investors have been pushing for a deal for some time.
Another big deal on the cards is the London Stock Exchange Group’s merger with data company Refinitiv, a potential $27bn deal. A formal announcement of the terms could come this week when the LSE publishes results.Another big deal on the cards is the London Stock Exchange Group’s merger with data company Refinitiv, a potential $27bn deal. A formal announcement of the terms could come this week when the LSE publishes results.
Asian markets were mixed on Monday, with shares in Japan weakening, while Australia’s benchmark ASX 200 rose by 0.95%. However, many investors will have their eyes on events later in the week, when the Federal Reserve is expected to cut interest rates for the first time in a decade.Asian markets were mixed on Monday, with shares in Japan weakening, while Australia’s benchmark ASX 200 rose by 0.95%. However, many investors will have their eyes on events later in the week, when the Federal Reserve is expected to cut interest rates for the first time in a decade.
Trade talks to fix the relationship between the US and China, one of the biggest factors in the Fed’s desire to support the economy, will resume tomorrow, although few are holding out hope of a positive development.Trade talks to fix the relationship between the US and China, one of the biggest factors in the Fed’s desire to support the economy, will resume tomorrow, although few are holding out hope of a positive development.
The agendaThe agenda
9:30am BST: Bank of England consumer credit (June)9:30am BST: Bank of England consumer credit (June)
9:30am BST: Bank of England mortgage approvals (June)9:30am BST: Bank of England mortgage approvals (June)
3:30pm BST: US Dallas Fed manufacturing index (July)3:30pm BST: US Dallas Fed manufacturing index (July)