The pound started August much like it ended July – in a bad way. The Dow Jones, meanwhile, picked itself back up after losing its head post-Fed decision on Wednesday.
Though the Bank of England failed to spark the kind of fireworks produced by its American counterpart, it nevertheless played its part in chipping away at sterling’s already fragile confidence. Keeping interest rates unchanged, Mark Carney and co. instead went about cutting their GDP forecasts for the UK; the country is now expected to see growth of just 1.3% in 2019, against the previously expected 1.5%, with the same again in 2020. It also, predictably, reminded investors of the adverse effects a no-deal Brexit would have on both the economy and the pound specifically.
This healthy dose of doom and gloom left cable down 0.4% – admittedly sterling was able to crawl back above $1.211 – while causing the pound to lose 0.2% against the euro. The FTSE failed to make the most of this, however; the bloody noses of its mining stocks, alongside a hefty 5% fall from Shell (LON:RDSa), forced the index half a percent lower, keeping it the wrong side of 7600.
After plunging 400 points in what could be labelled an overreaction to the Fed’s not-dovish-enough rate cut, the Dow Jones went about rebuilding on Thursday. A 140 point climb just about lifted the Dow back above 27000 ahead of Friday’s nonfarm jobs report.
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