The realities of a majority Boris Johnson government began to dawn on the pound this Tuesday, while the European indices pulled back after Monday’s giddy gains.
The newly minted Prime Minister and his team are working on amending the withdrawal agreement to make sure that the so-called transition period must end on December 31st 2020, seeking to ‘legally prohibit government agreeing to any extension’.
With the threat of a no-deal Brexit re-emerging the other side of the election sterling’s extremely festive December was, if not cut short, then certainly a bit scrooged following these reports. Against the dollar it fell 0.7%, tumbling back under $1.326, while against the euro a 0.6% decline forced it below €1.19. In the context of the month’s gains, that’s a relatively minor decline. However, it could be a sign of things to come as Johnson starts, well, swinging his Johnson around.
The FTSE 100 was also on a big of a comedown after the bell, shedding half a percent but keeping above 7500. The DAX and CAC were similarly rouged, slipping 0.4% and 0.3% respectively. This, perhaps, a natural reaction to the market’s recent trade deal celebrations – a trade deal, remember, that is far from the conflict-resolving agreement investors would like.
It’s another busy morning for data. Following Monday’s truly dreadful UK flash PMIs, the country gets a glimpse at the jobs sector. Wage growth (including bonuses) is set to slip from 3.6% to 3.4% month-on-month, with the unemployment rate rising back up to 3.9% from 3.8%.
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