The pound got a pounding this Friday, investors focusing on the morning’s batch of bad UK data over the disappointments from the eurozone and US.
Thanks to a weaker than forecast annualised Q2 GDP reading, a widening current account deficit and another jump in net lending to individuals (the rise in consumer credit is one of the BoE’s key concerns at the moment) sterling fell around 0.7% against both the euro and the dollar.
That undoes the first half of the week’s German election-inspired gains against the former, while extending the pound’s hawkish Yellen/Trump tax plan losses against the greenback. Not only that, it means sterling’s super September surge – cable, for example, began the month below $1.29 and is now above $1.335 – is ending on something of a sour note.
The pound’s dramatic drop breathed life into a previously stagnant FTSE, the index surging 0.8% to hit a fresh 2-and-a-bit week high. Despite the euro’s gains the DAX continued its 3 month high-hitting push, grading 12780 with a 0.6% rise. The CAC wasn’t quite as excitable, though it still crossed 5300 for the first time since early June.
As for the Dow Jones, it lacked the enthusiasm of its European peers, slipping 0.1% after the bell. Elsewhere it was a mixed afternoon for US data; the core PCE price index – a Fed favourite for measuring inflation – missed estimates as it stubbornly remained at 0.1%, while the Chicago PMI beat forecasts by quite a way, coming in at 65.2 against the 58.6 expected.
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