As a nation we have not always been noted for ‘sticking up for ourselves’. However, recent reports suggest that the UK will be taking legal action against the European Central Bank. This is because of a planned change to European banking rules that will more than likely harm the City of London. Whilst we have managed to avoid the majority of the overriding concerns surrounding eurozone debt issues, our collateral involvement on the continent means that we are committed to certain regulations that inevitably drags us in at certain points (repeating yourself?). This is a debate I will leave you as the reader to discuss over your family dinner or supper (depending on where in UK you’re from).
Pound Sterling – UK Markets
Despite economists predicting that a report released today will show that retail sales slowed in August, for once UK data proved beneficial. This gave sterling the slight push that it needed to break the downward cycle we have seen throughout the first half of the week.
This news will come as a welcome relief to the Bank of England who is still considering more asset purchases. Negative retail figures would have added to this case. Prior to the announcement this morning, the pound had approached its weakest level against the US Dollar since January. It is worth stating that the majority of economists still view the pound in a negative light, claiming that our currency is still very much on the back foot.
US Dollar – US Markets
More bad news has filtered its way out of the US after figures revealed retail sales practically stagnated in August. Sales failed to increase in August compared to the previous month, adding to evidence of an economic slowdown. To make matters worse, July’s figures were also revised down from 0.5 to 0.3 percent. This was mainly due to a fall in car sales. Put in perspective, figures a year earlier were 7.2 percent higher. Following recent gains, the US Dollar has just lost a little bit of ground overnight, giving sterling some respite.
Euro – European Markets
In an attempt to restore some confidence in the eurozone, leaders from Greece, France and Germany have said that Greece is integral to the longevity of the plan. Whilst I, among many people, remain incredibly sceptical, Greece maintains that they are determined to meet all the deficit reduction plans it agreed to in exchange for its two bailouts. The aim of this announcement is to calm markets that have been incredibly turbulent in recent weeks. The euro itself has clawed back some of the losses seen over the past week but investors worldwide remain incredibly sceptical over its long term stability.
Other Currencies – Highlights
The Canadian Dollar fell for the first time in three days, weakening to within one cent of parity with its US counterpart. This was on off the back of falls in the price of oil and copper, as concerns of an economic slowdown mount.
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