The FTSE was weaker at the start of the trading day, taking its cue from Asia where a decline in Chinese GDP to a new low of 6% took the wind out of the sails of Asian markets. Though analysts had expected to see Chinese GDP growth to be weaker than in the previous quarters the overall expectation was of an increase of 6.1% with a decline to below 6% at some point next year. However, Friday’s data shows that the decline is accelerating and that trade war frictions are taking their toll faster than expected.
In Europe the car sector was hit even harder after Renault warned that it expects its 2019 full year sales decline will be worse than expected. On the FTSE Rolls-Royce and Evraz followed suit with a 2.7% and 2.2% decline.
Last night’s dip in the pound was tempered this morning by comments from Bank of England Deputy Governor Dave Ramsden saying that if the Brexit proposal that is currently on the table gets the green light from MPs this weekend and the UK leaves the EU by the October deadline the Bank would opt for limited and gradual interest rate hikes. Of course, there are a number of very big “ifs” in that sentence, including whether the Northern Ireland unionist party DUP will change its mind and back the deal.
For the moment though the currency market seems cautiously optimistic and the pound is trading up 0.14% against the dollar and has firmed 0.1% against the euro.
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