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/2019/jul/30/sterling-pound-us-dollar-euro-boris-johnson-hard-line-no-deal-brexit-bank-of-england-business-live
The article has changed 15 times. There is an RSS feed of changes available.
| Version 7 | Version 8 |
|---|---|
| Pound suffers further slide after Boris Johnson takes Brexit hard line – business live | Pound suffers further slide after Boris Johnson takes Brexit hard line – business live |
| (32 minutes later) | |
| It would probably take conciliatory noises from the government or the EU to push the pound back up, although perhaps don’t hold your breath for any change in tone any time soon, given that many key figures on either side will be on holiday in August. | |
| Currency traders are trying to work out what it will take for sterling to fall further, given that markets appear to have finally priced in Boris Johnson’s no-deal Brexit threat. | |
| Added to that is the complication that the Bank of England (due to meet tomorrow before Thursday’s decision) would likely have to cut interest rates if there is a no-deal Brexit. | |
| John Goldie, a dealer at foreign exchange company Argentex Group, said: | |
| The market finally seems to be waking up to the potential for No Deal Brexit, despite the fact that it has been the legal default for over two years now and consecutive prime ministers have maintained that they would prefer to leave without a deal than with a bad deal. The difference is that, this time, people believe Boris Johnson just might be crazy enough to carry out the threat. | |
| The Bank of England corrected its panic cut post-referendum when they raised rates in 2017 and then took interest rates to the highest since the financial crisis in mid-2018. With this buffer, as well as a seemingly synchronised dovish shift across the major economies, the market is already pricing over 50% likelihood of a reduction in rates later this year. | |
| There is not likely to be any change from the MPC this week but any suggestion that a cut has been considered would cement the expectation for action in the coming months and likely undermine the pound further. | |
| The number of insolvent companies in England and Wales hit a five-year high in the second quarter of 2019, in the latest ominous economic signal for the British economy. | The number of insolvent companies in England and Wales hit a five-year high in the second quarter of 2019, in the latest ominous economic signal for the British economy. |
| There were 4,321 company insolvencies between April and June, 2.6% higher than in the first three months of the year and an increase of 11.9% year-on-year. | There were 4,321 company insolvencies between April and June, 2.6% higher than in the first three months of the year and an increase of 11.9% year-on-year. |
| The last time insolvencies hit this level was the start of 2014. | The last time insolvencies hit this level was the start of 2014. |
| Duncan Swift, president of insolvency and restructuring trade body R3, said: | Duncan Swift, president of insolvency and restructuring trade body R3, said: |
| Today’s figures are evidence of a difficult period for UK businesses. Tighter constraints on consumers and significant uncertainty about the future of the UK economy and the UK’s relationship with the EU are just some of the key factors at play that are making the business climate a challenging one. | Today’s figures are evidence of a difficult period for UK businesses. Tighter constraints on consumers and significant uncertainty about the future of the UK economy and the UK’s relationship with the EU are just some of the key factors at play that are making the business climate a challenging one. |
| Questions around what Brexit really means have hit investment and growth levels, and led to a degree of economic stagnation. | Questions around what Brexit really means have hit investment and growth levels, and led to a degree of economic stagnation. |
| Businesses in a variety of industries are struggling right now. Retailers are suffering as the world in which they operate changes and more and more people shop online. Manufacturing output and confidence is low. Private and business car sales are down. And businesses which stockpiled items ahead of the original Brexit deadline of 29 March will now be seeing those decisions have an impact on their cash flow levels. | Businesses in a variety of industries are struggling right now. Retailers are suffering as the world in which they operate changes and more and more people shop online. Manufacturing output and confidence is low. Private and business car sales are down. And businesses which stockpiled items ahead of the original Brexit deadline of 29 March will now be seeing those decisions have an impact on their cash flow levels. |
| Simply put: it’s an uncertain, difficult time to be in business right now. | Simply put: it’s an uncertain, difficult time to be in business right now. |
| The pound has moderated some of its losses for the day: it has now lost 0.3% for the day to trade at around $1.2184 against the US dollar. | The pound has moderated some of its losses for the day: it has now lost 0.3% for the day to trade at around $1.2184 against the US dollar. |
| The slight recovery has weighed on the FTSE 100, which is now up by only 0.07%. | The slight recovery has weighed on the FTSE 100, which is now up by only 0.07%. |
| But any talk of recovery comes in the context of a very difficult month for sterling owners. The pound remains down by 4.5% over the year to date, or 4% in the past month alone – leading to some rather unflattering comparisons: | But any talk of recovery comes in the context of a very difficult month for sterling owners. The pound remains down by 4.5% over the year to date, or 4% in the past month alone – leading to some rather unflattering comparisons: |
| Contra the doom-mongering, the pound is still up marginally against the Turkish lira this year. pic.twitter.com/CSTeBHKShm | Contra the doom-mongering, the pound is still up marginally against the Turkish lira this year. pic.twitter.com/CSTeBHKShm |
| Important pensions news from the Financial Conduct Authority. | Important pensions news from the Financial Conduct Authority. |
| Britain’s financial watchdog has proposed measures to protect consumers transferring out of defined benefit pension schemes, including a ban on contingent charging for advice and a clampdown on ongoing fees over 20 to 30 years – practices it said were costing customers £2bn a year. | Britain’s financial watchdog has proposed measures to protect consumers transferring out of defined benefit pension schemes, including a ban on contingent charging for advice and a clampdown on ongoing fees over 20 to 30 years – practices it said were costing customers £2bn a year. |
| Many savers have been encouraged to move their pensions when they would be better advised to stay put. | Many savers have been encouraged to move their pensions when they would be better advised to stay put. |
| You can read more from the Guardian’s Julia Kollewe here: | You can read more from the Guardian’s Julia Kollewe here: |
| FCA plans more consumer protection on pension transfers | FCA plans more consumer protection on pension transfers |
| Giffgaff has been fined £1.4m for overcharging 2.6 million mobile phone customers. | Giffgaff has been fined £1.4m for overcharging 2.6 million mobile phone customers. |
| An Ofcom investigation revealed the network, which is owned by O2’s parent company Telefónica, overcharged users a total of almost £2.9m, writes the Guardian’s Mark Sweney. | An Ofcom investigation revealed the network, which is owned by O2’s parent company Telefónica, overcharged users a total of almost £2.9m, writes the Guardian’s Mark Sweney. |
| The communications regulator said the billing mistake was “unacceptable” and imposed a further £50,000 fine because Giffgaff failed to provide accurate information during its investigation. | The communications regulator said the billing mistake was “unacceptable” and imposed a further £50,000 fine because Giffgaff failed to provide accurate information during its investigation. |
| You can read more here: | You can read more here: |
| Giffgaff fined £1.4m for overcharging millions of mobile customers | Giffgaff fined £1.4m for overcharging millions of mobile customers |
| Some more interesting detail on the UK from the eurozone economic survey: consumers don’t appear to be that bothered by the Brexit chaos. | Some more interesting detail on the UK from the eurozone economic survey: consumers don’t appear to be that bothered by the Brexit chaos. |
| Here’s more from Samuel Tombs, chief UK economist at Pantheon Macroeconomics: | Here’s more from Samuel Tombs, chief UK economist at Pantheon Macroeconomics: |
| The overall sentiment indicator for consumers jumped to -7 in July – its highest level since August 2018 – from -11 in June. Confidence among households about the economic outlook recovered in July, while households’ optimism about the 12-month outlook for their personal finances rose further above its long-run average. | The overall sentiment indicator for consumers jumped to -7 in July – its highest level since August 2018 – from -11 in June. Confidence among households about the economic outlook recovered in July, while households’ optimism about the 12-month outlook for their personal finances rose further above its long-run average. |
| Although caveated by the fact that the survey was carried out before Johnson ascended to the premiership, “there’s no sign yet that consumers are going to tap the brakes on spending in the run-up to the October Brexit deadline”, Tombs said. | Although caveated by the fact that the survey was carried out before Johnson ascended to the premiership, “there’s no sign yet that consumers are going to tap the brakes on spending in the run-up to the October Brexit deadline”, Tombs said. |
| The weakening in the eurozone is reflected across the world, and it has drawn a response from central bankers who are planning to add support to their ailing economies. | The weakening in the eurozone is reflected across the world, and it has drawn a response from central bankers who are planning to add support to their ailing economies. |
| The Federal Reserve is expected to cut interest rates tomorrow, and the European Central Bank has all but committed to moving in September (although the Bank of England is expected to remain on hold until the Brexit path becomes clearer, for better or worse). | The Federal Reserve is expected to cut interest rates tomorrow, and the European Central Bank has all but committed to moving in September (although the Bank of England is expected to remain on hold until the Brexit path becomes clearer, for better or worse). |
| The Bank of Japan’s Haruhiko Kuroda this morning added to the sense of wariness among central bank governors, saying that he was prepared to ease monetary policy if need be. | The Bank of Japan’s Haruhiko Kuroda this morning added to the sense of wariness among central bank governors, saying that he was prepared to ease monetary policy if need be. |
| While the BoJ did not change interest rates, it said it would add more stimulus “without hesitation” if there is a global slowdown that threatens to weaken inflationary pressures. | While the BoJ did not change interest rates, it said it would add more stimulus “without hesitation” if there is a global slowdown that threatens to weaken inflationary pressures. |
| Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said Kuroda echoed what other policymakers have been saying in recent weeks. | Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said Kuroda echoed what other policymakers have been saying in recent weeks. |
| The language now promises further easing if downside risks materialise, mainly regarding developments in overseas economies. | The language now promises further easing if downside risks materialise, mainly regarding developments in overseas economies. |
| Eurozone business confidence fell to an almost six-year low in July, according to closely followed indicators published by the European commission. | Eurozone business confidence fell to an almost six-year low in July, according to closely followed indicators published by the European commission. |
| Business confidence for the eurozone fell “markedly”, the commission said, from a reading of 0.17 points in June to a negative reading of 0.12 in July. | Business confidence for the eurozone fell “markedly”, the commission said, from a reading of 0.17 points in June to a negative reading of 0.12 in July. |
| That was the first negative reading for business confidence since October 2013, and the lowest since August of that year. It was also well below economists’ average expectations of 0.08. | That was the first negative reading for business confidence since October 2013, and the lowest since August of that year. It was also well below economists’ average expectations of 0.08. |
| The commission’s economic sentiment indicator, which combines consumer and business confidence, fell to its lowest since 2016. | The commission’s economic sentiment indicator, which combines consumer and business confidence, fell to its lowest since 2016. |
| The figures add to an ominous picture for the eurozone economy, which has been blighted in particular by the struggles of the German manufacturing industry – with fears rising of a global economic slowdown. | The figures add to an ominous picture for the eurozone economy, which has been blighted in particular by the struggles of the German manufacturing industry – with fears rising of a global economic slowdown. |
| British bakery chain Greggs has reported a 58% rise in profits today, after the buzz around its vegan sausage roll boosted sales. | British bakery chain Greggs has reported a 58% rise in profits today, after the buzz around its vegan sausage roll boosted sales. |
| The Newcastle-based company announced a special dividend of 35p per share – a vegan sausage roll payout, perhaps. | The Newcastle-based company announced a special dividend of 35p per share – a vegan sausage roll payout, perhaps. |
| Greggs launched its vegan sausage roll in January with a hugely successful marketing campaign that drew the ire of famous ranters but boosted sales. | Greggs launched its vegan sausage roll in January with a hugely successful marketing campaign that drew the ire of famous ranters but boosted sales. |
| Underlying pre-tax profits came in at £40.6m for the six months to 29 June, up from £25.7m the year before. | Underlying pre-tax profits came in at £40.6m for the six months to 29 June, up from £25.7m the year before. |
| There were heavier sterling trading volumes than normal in Asia trading hours, say analysts at Deutsche Bank led by Jim Reid. | There were heavier sterling trading volumes than normal in Asia trading hours, say analysts at Deutsche Bank led by Jim Reid. |
| The renewed selling this morning has left the pound just a percent away from hitting a 34-year low (if ignoring the “flash crash” of October 2016). They said: | The renewed selling this morning has left the pound just a percent away from hitting a 34-year low (if ignoring the “flash crash” of October 2016). They said: |
| With 93 days until the UK’s scheduled departure from the EU on October 31, and with Johnson’s policy of leaving that day “no ifs or buts”, fears of a no-deal outcome are increasingly being reflected in the currency. | With 93 days until the UK’s scheduled departure from the EU on October 31, and with Johnson’s policy of leaving that day “no ifs or buts”, fears of a no-deal outcome are increasingly being reflected in the currency. |
| It isn’t only sterling markets that are being affected: the yield on the 10-year gilt, the benchmark rate for UK government borrowing, has matched its almost-three-year low of 0.628% this morning. | It isn’t only sterling markets that are being affected: the yield on the 10-year gilt, the benchmark rate for UK government borrowing, has matched its almost-three-year low of 0.628% this morning. |
| Yields fall as prices rise in response to higher demand for the bonds. That demand has been driven in part by expectations that a no-deal Brexit would lead to economic stimulus from the Bank of England. Lower interest rates tend to make the returns from bonds more attractive. | Yields fall as prices rise in response to higher demand for the bonds. That demand has been driven in part by expectations that a no-deal Brexit would lead to economic stimulus from the Bank of England. Lower interest rates tend to make the returns from bonds more attractive. |
| Remember that Johnson and much of his cabinet have already voted in favour of the withdrawal deal that Theresa May agreed with the EU. But his new-found conversion to leaving without a deal if necessary reflects the apparent impossibility of getting enough votes to pass that deal. | Remember that Johnson and much of his cabinet have already voted in favour of the withdrawal deal that Theresa May agreed with the EU. But his new-found conversion to leaving without a deal if necessary reflects the apparent impossibility of getting enough votes to pass that deal. |
| Kit Juckes, chief foreign exchange strategist at Société Générale, said: | Kit Juckes, chief foreign exchange strategist at Société Générale, said: |
| UK PM Boris Johnson’s position that there is no point talking about the exit deal with the EU until the Irish border backstop arrangement is removed, reflects his inability to get the deal in its current format through Parliament. | UK PM Boris Johnson’s position that there is no point talking about the exit deal with the EU until the Irish border backstop arrangement is removed, reflects his inability to get the deal in its current format through Parliament. |
| His hard-line stance is seeing the Conservatives win voters back from the Brexit Party, according to recent polls, and he needs either to get a deal from the EU that he can get through Parliament or win back enough Brexiteer votes to be able to win an election. Either way, he is committed to a hard-line stance towards the EU that will of course, be rebuffed aggressively. In the process, sterling moves to the bottom of its post-referendum ranges and re-tests historical trade-weighted lows. | His hard-line stance is seeing the Conservatives win voters back from the Brexit Party, according to recent polls, and he needs either to get a deal from the EU that he can get through Parliament or win back enough Brexiteer votes to be able to win an election. Either way, he is committed to a hard-line stance towards the EU that will of course, be rebuffed aggressively. In the process, sterling moves to the bottom of its post-referendum ranges and re-tests historical trade-weighted lows. |