The pound suffered badly against the dollar when coronavirus hit the global markets in March. British Sterling’s highest total this year is now just above $1.31.
It comes as the FT has reported the exchange-rate shifts shows the pound now faces “no big risks” in the next six months.
This will be the time of the December 31 exit from the EU’s single market and customs union.
“The risks priced into options markets are surprisingly moderate considering we are approaching a crunch point,” said David Riley, chief investment strategist at BlueBay Asset Management.
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4.25pm update: US Treasury accuses Vietnam of deliberately undervalued currency in 2019
The US Treasury has determined that Vietnam’s currency was deliberately undervalued in 2019 by about 4.7% against the dollar, according to a new currency valuation assessment sent to the U.S. Commerce Department late on Tuesday.
In the assessment associated with a Commerce anti-subsidy investigation into vehicle tire imports from Vietnam, the Treasury said the under valuation was the result of Vietnamese “government action on the exchange rate.”
These included $22billion in net state foreign exchange purchases in 2019, including through the State Bank of Vietnam, the Treasury said.
3.45pm update: FTSE plunges further into the red
The FTSE-100 index at 3.45pm was down 60.46 at 6044.27.
3.40pm update: Wall Street stocks dip
Wall Street’s main indexes have slipped following a three-day rally amid a drop in Apple shares
Apple Inc slipped 1.7%, set to snap a five-day winning streak and weighing heavily on the three main indexes.
However, the US benchmark S&P 500 opened at a record high as as US and China officials pledged a firm commitment to a Phase One trade deal.
Christopher Grisanti, chief equity strategist at MAI Capital Management in Cleveland, Ohio, said: “Both countries believe it’s in their interest to cut a deal and are making noise that they don’t want to let political concerns to interfere with the trade and also disrupt the world economy.”
Investors will also be looking towards the annual conference of US central bankers where Federal Reserve Chairman Jerome Powell is scheduled to speak.
At 10.08am ET (3.08pm BST), the Dow Jones Industrial Average was down 85.39 points, or 0.30%, at 28,223.07, the S&P 500 was down 1.85 points, or 0.05%, at 3,429.43. The Nasdaq Composite was down 17.34 points, or 0.15%, at 11,362.38.
2.45pm update: FTSE 100 dips back into the red
The FTSE-100 index at 2.45pm was down 20.36 at 6084.37.
2.40pm update: Euro rises against US dollar
Euro rises to session high of $1.1844 against the greenback
1.45pm update: FTSE 100 rebounds
The FTSE-100 index at 1:45pm was up 3.19 at 6107.92.
12.30pm update: UK retail jobs slashed in most since 2009
British retailers have cut the most jobs since the depths of the financial crisis and expect the pace of losses to accelerate, the Confederation of British Industry said, adding to warning signs of an expected sharp rise in unemployment.
High Street staples Marks & Spencer, Debenhams and WH Smith have already announced job losses in recent weeks, reflecting a shift in demand to online sales during the pandemic.
Quarterly CBI figures showed the employment balance – which measures job changes over the past 12 months – sank to -45 in August from -20 in May, reaching its lowest since February 2009.
Tuesday’s data also showed an unexpected drop in sales this month, which contrasted with a recent pick-up in demand by consumers after the coronavirus lockdown was lifted.
CBI economist Alpesh Paleja said: “Trading conditions for the retail sector remain tough.
“Firms will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.”
However, Howard Archer, an economist with forecasters EY Item Club, forecasts a potential rebound in consumer spending in the third quarter.
He said: “However, the weaker-than-expected August CBI survey is a reminder that there is considerable uncertainty as to just how willing and able consumers will be to spend beyond the third quarter.
“Indeed, persistent consumer caution is seen as a significant risk that could limit the UK recovery.”
Retailers in the CBI survey said spending in August was 27 percent below normal compared with a 79 percent shortfall in June – a disparity not shown in other figures, which may reflect how social distancing requirements have had a much bigger impact on some sectors – such as high street clothing retailers – than others.
The CBI survey was based on responses from 63 retail chains collected between July 28 and August 14.
11am update: FTSE plummets as morning gains wiped out
FTSE’s bright morning has ended with a bang, as its morning gains were all but wiped out by a massive slide.
FTSE opened at 6,104 this morning before soaring to a high of 6,166.
However, the UK index has now crashed back down to earth, dropping to 6,107 before rising slightly to 6,114.
10:00am: Co-operative Bank to cut hundreds of jobs
The Co-operative Bank has said it plans to cut around 350 jobs.
The bank announced it planned to close 18 branches and reduces middle management and head office roles.
The branches will close by December 1 this year.
The sites were chosen after analysing footfall to branches over the last 12 months.
More customers are choosing to bank online, and making fewer transactions in branches, chief executive Andrew Bester said.
Mr Bester said: “Our people have shown great dedication and commitment to our customers over the past few months, so we are very sorry to announce this news today.
“Unfortunately, we’re not immune to the impact of recent events, with the historically low base rate affecting the income of all banks and a period of prolonged economic uncertainty ahead, which means it’s important we reduce costs and have the right-sized operating model in place for the future.
“At the same time, we are responding to the continuing shift of more and more customers choosing to bank online, with lower levels of transactions in branches, a trend which has been increasing for some time, across the banking sector and more broadly.”
9.40am: EU markets enjoy slow but steady start to day
Like FTSE, EU markets have had a positive start to the day.
Euronext 100 is up 0.55%, CAC 40 is up 0.70%, DAX is up 0.60% and Swiss Market Index is up 0.17%.
8.15am update: FTSE soars on open
FTSE has soared on open, mirroring yesterday’s morning success.
The UK index closed at 6,104 yesterday but has already jumped to 6,166 today.
This marks a leap of 62 points in just 15 minutes this morning.
7.15am: Tesco to create 16,000 new jobs
Tesco is set to create 16,000 new jobs, as the supermarket chains looks to exploit “exceptional” growth in online sales.
A full 10,000 new roles will focus on picking customer orders from shelves ahead of home deliveries.
At least 3,000 new delivery drivers will also be hired.
During the pandemic, Tesco’s online sales have jumped from 9% to 16%.
Tesco UK & Ireland’s chief executive Jason Tarry said: “These new roles will help us continue to meet online demand for the long term.”
6.07am update: China’s Xi warns “period of turbulent change” as external risks rise
Chinese President Xi Jinping warned that the world’s second-biggest economy is facing a period of ‘turbulent change’ and that rising external markets risk required policymakers to increasingly rely on domestic demand to spur growth.
Xi, chairing a seminar on Monday with a group of policy advisors and state economists, discussed the country’s mid- to long-term economic trends in preparation for the drafting of the 14th Five-year plan.
The five-yearly economic blueprint is expected to be unveiled in the annual parliament meeting next year, and Xi said China must be prepared for “a period of turbulent change” as the coronavirus pandemic has accelerated protectionism, hammered the world economy and disrupted supply chains.
“In the coming period, we will face more and more headwinds in the external environment, and we must be prepared to deal with a series of new risks and challenges,” he said, according to comments released by state news agency Xinhua late Monday night.
Xi said the domestic market will “dominate the national economic cycle” in the future, but vowed to further open up China’s economy.