The contrast between the UK and eurozone economies didn’t do the pound any favours this Thursday.
While the UK’s 2nd estimate third quarter GDP came in unchanged at 0.4% – and 1.5% at the annual rate – that wasn’t exactly something to celebrate. Especially not when it was revealed that construction output fell 0.9%, worse than initially thought, with business investment growth shrinking from 0.5% to 0.2% between Q2 and Q3.
In comparison, the eurozone’s most recent composite PMI hit a 6 and a half year peak of 57.5, driven higher by a strong month for France (and, predictably, Germany). The reminder that the UK is seriously lagging behind its peers dragged the pound down 0.3% against the euro, helping sterling shed more of the growth it managed at the start of the week.
Interestingly the euro’s gains – it was also up 0.2% against the dollar, with the greenback weakened by last night’s cautious set of Fed meeting minutes – didn’t prevent the eurozone indices from enjoying the region’s full-bodied performance. The DAX climbed 0.3% to keep its head above 13000, while the CAC surged 0.7% and the IBEX rose half a percent.
As for the FTSE, the index managed to reverse its early losses and clamber across 7400 thanks to both the pound’s sluggish showing and the red-to-green switch in the commodity sector. Centrica's (LON:CNA) near 15% plunge and the generally dismal state of the UK economy, however, prevented the FTSE from matching its eurozone peers for the umpteenth time this year.
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