A decent string of Eurozone flash PMIs, and some rate hike doubt-casting comments from Sir Jon Cunliffe, meant the pound had quite a disappointing morning.
Cunliffe, a deputy governor at the Bank of England, argued that a November rate hike is an ‘open question’ due to the UK’s economic weakness, further undermining the hawkishness the central bank showed over the summer. The pound could well be in for a nervy few weeks, then, with the interest rate situation seeming to only get murkier as the November meeting grows closer.
Also contributing to sterling’s losses was a largely decent selection of flash manufacturing and services PMIs from France, Germany and the Eurozone as a whole. The region-wide manufacturing reading far surpassed estimates at 58.6, though its services counterpart did unexpectedly dip from 55.8 to 54.9 month-on-month.
All this meant the pound shed 0.3% against the euro, sending it back towards €1.12, and 0.2% against the dollar. Yet the FTSE failed to squeeze out any momentum from these sterling losses; instead the UK index nudged a paltry 6 points higher, hampered, in part, by Whitbread’s 5% fall.
As for the Eurozone indices, they were all pretty perky, even with the euro pairing its gains against the pound with a 0.2% rise against the greenback. The DAX and CAC were both up 0.2%, allowing the former to re-cross 13000, while the Spanish IBEX rebounded from yesterday’s Catalan-inspired decline by jumping half a percent.
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