In a week littered with a UK jobs report, inflation and retail sales readings, Federal Reserve and ECB meetings and a historic summit between the US and North Korea, the pound fell at the very first hurdle on Monday.
With fingers pointed at everything from Brexit woes to trade war concerns, the UK’s manufacturing production saw the biggest month-on-month drop in more than 5 years between March and April, falling from an already not great -0.1% to a truly miserable -1.4%. Industrial production was no better, plunging from 0.1% to -0.8%, with the rotten cherry top being news that the trade deficit widened by an ugly £1.9 billion to £9.7 billion for the 3 months to April.
Understandably the pound, already feeling rather fragile, wasn’t elated by all this. Against the dollar it reversed its initial gains to fall 0.3%, quickly sending it back to $1.337; against the euro, meanwhile, it slipped half a percent, that loss forcing it below €1.134 and towards the bottom end of its recent trading bracket.
FTSE and co. hanging on to US/North Korea hope
The FTSE, which was already flush with the same (potentially misplaced) optimism driving the markets higher ahead of the US-North Korea tête-à-tête, gained a bit more swagger in the face of sterling’s slide, the index jumping 0.8% as the day went on. The DAX and CAC weren’t quite as buoyant, but were still fairly perky, rising 0.6% and 0.4% respectively.
As for the Dow Jones, currently the US index looks a bit reticent, with the futures suggesting a paltry 0.2% increase after the bell. Yet, that would still see the Dow hit a fresh 3 month peak, and allow it to carry over last week’s rally – a rally that has investors’ eyes shut and fingers in their ears at both the global trade tensions and the likelihood of a Fed rate hike on Wednesday.
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