An early push higher in sterling has run into some resistance against the US dollar with the market dropping back below the $1.30 following Theresa May’s speech at the Tory party conference. Overall the pound is a little higher on the day however. There have been no real standout remarks from the PM as far as Brexit is concerned with her stance seemingly little changed despite the recent blows to her proposal. May warned of the short term damage that a no deal would bring to the UK economy before adding that she will not rule this out as it would weaken the country’s negotiating position - seemingly oblivious that this public admission may well do just that. Event risks remain high for the pound going forward with the next 7 days likely to reveal whether there is a realistic chance that a deal can be reached by the EU summit or whether this game of brinkmanship lurches ever closer to the cliff edge.
UK service sector growth slows slightly
According to the latest purchasing managers’ index Britain’s service sector growth dropped slightly last month with higher input costs and rising uncertainty due to the snail’s paced Brexit negotiations weighing on performance. A print of 53.9 compared to the 54.3 in August only marks and small pullback and the indicator remains well above the 50 mark that deontes growth or contraction. However, it is below the long term average of 55 and overall is in keeping with steady growth of around 0.4% per quarter. On the whole this suggests the economy is performing ok, but should no clear progress be made on Brexit talks in the coming weeks and months then the uncertainties for business will only increase and this would no doubt hinder economic activity into year-end.
Aston Martin reverses in early trade
This morning was a landmark day for Aston Martin, with the luxury automaker making its debut on the London Stock Exchange. It would be folly to place too great a weight on the direction of the early trade but it is worth pointing out that the stock has gotten off to a soft start with declines of around 7% seen at the time of writing. The current price near £17.70 is below the narrowed £18.50-£20.00 range set on Monday but still falls within the broader £17.50-£22.50 range initially proposed - albeit at the lower end. Investors may be a little concerned around the firm’s ambitious growth plans with a new core model scheduled for each of the next 4 years presenting a fair amount of execution risk.