Summary:
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Pound jumps as Farage announces Tory support
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UK GDP bounces back but data still soft
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Wall St. starts lower
There’s been a sharp move higher in the pound in recent trade after Nigel Farage has announced that his Brexit party won’t contest the 317 Tory seats won in 2017. This is potentially a major development in the upcoming election as it greatly reduces the chance of splitting the leave vote between the Conservatives and the Brexit party.
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Create account Try a demo Download mobile app Download mobile appThere’s still some way to go before Britons head to the polls but this development could put a quite different spin on how the lead in popular polls translates to seats for the Tories. This alliance between two leave supporting parties could also pressure those who back remain to follow suit and try to form similar pacts with any suggestion of a Labour/Lib Dem agreement something to watch closely in the coming weeks.
To start the week a plethora of data releases from the UK have overall painted a not too pretty picture of the underlying economy, despite growth bouncing back into positive territory following the contraction seen in the second quarter. The data was as follows:
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Preliminary GDP Q/Q read of +0.3% vs +0.4% exp. -0.2% prior
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Manufacturing production M/M: -0.4% vs -0.2% exp. -0.7% prior
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Industrial production M/M: -0.3% vs -0.1% exp. -0.7% prior - revised down from -0.6%.
While the positive GDP reading means that the UK has managed to stave off a recession for another year, there is little doubt that the economy is spluttering with political uncertainty and a slowdown in global activity clearly taking their toll. down from -0.6%
It’s been a bit of a soft start to the week for indices which began in Asia with risk sentiment taking a hit on reports that a protestor was shot by police in Hong Kong during the Monday morning commute. A weekend of demonstrations saw nearly 90 people arrested and serves as a timely reminder of the civil unrest that continues in the region. Both the Shanghai composite and the Hang Seng fell by around 2% in response. Major indices in Europe and the US are still trading lower on the European close, although they have recouped some of their earlier declines.
