Pound on track for worst run in almost a year amid market volatility – business live | Business
Introduction: Pound on track for worst run in a year
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
After a week of volatile trading, the pound is on track for its longest run of losses in a almost a year.
Sterling is heading for its fourth weekly loss in a row, which would be its worst run since last September.
The pound has dropped by two and a half cents against the US dollar over the last month, amid a scramble for safe-haven assets. In mid-July, sterling was worth $1.30 – today, it’s trading around $1.275.
A candlestick chart showing the pound against the US dollar Photograph: LSEG
Last week’s Bank of England interest rate cut, and the prospect of one or two further rate cuts this year, pushed the pound down.
Sterling has also dropped for the last four weeks against the euro.
Alex Kuptsikevich, senior market analyst at FxPro, says market balance has shifted back in favour of sellers.
The British Pound has been under increased pressure over the past few weeks, facing serious resistance as it tries to break important long-term levels against the Dollar and Euro.
The most important reason for the pressure on the pound is monetary policy, as the Bank of England swiftly eased policy in response to falling inflation.
However, the impressive buying of the Euro against the Pound over the past fortnight cannot be overlooked. The fall in EURGBP to near two-year lows has made buying euros against the pound attractive, especially when it appeared that the ECB and the Bank of England were moving at roughly the same pace in easing policy.
The agenda
7am BST: Germany’s inflation rate for July
9am BST: Italian inflation rate for July
1.30pm BST: Canadian jobs report for July
5pm BST: Russia’s Q2 GDP report and inflation data for July
Key events
Hargreaves Lansdown takeover agreed
One of the UK’s leading investment houses, Hargreaves Lansdown, has agreed to be taken over.
A group of private equity companies led by CVCCapitalPartners have hammered out a deal that values HargreavesLansdown at £5.4bn.
They will pay £11.40 per share – £11.10 in cash plus a 30p dividend from HL. Investors can also chose to reinvest their stock in the private equity group’s unlisted vehicle.
The deal means the London Stock Exchange loses another member, at a time when it is fighting to attract new listings.
The firm was founded in 1981 by Peter Hargreaves and Stephen Lansdown, in a spare bedroom in Hargreaves’ house. It offers a variety of investment options, including ISAs and the ability to buy shares, bonds and exchange traded funds (ETFs).
The takeover means hefty payouts for its founders – Hargreaves owns almost 20% of the company, while Lansdown owns 5.7%.
The Tokyo Stock Exchange. Photograph: Kazuhiro Nogi/AFP/Getty Images
Over in Tokyo, traders can finally relax after a week of highly volatile market moves.
The Nikkei 225 share index has just closed, up around 0.5%. That ends a week which brought the Nikkei’s biggest plunge since 1987, followed by its best day since 2008.
Today had some drama too – the index initially surged by 2%, after Wall Street’s strong session, before dropping into the red in afternoon trading.
The stock market roller coaster took another twist last night, as Wall Street posted its best day of trading in nearly two years.
The S&P 500 share index rose 2.3% to 5,319.32, its biggest single-day jump since November 2022, as investors welcomed a drop in the number of Americans filing new unemployment benefit claims last week.
That eased some of the US recession worries that have been building in the markets.
UBS: Labour's honeymoon likely over
The pound’s weakness since mid-July comes after a strong start to the summer.
It jumped by three and a half cents in the first two weeks of last month, as investors appeared to welcome the incoming Labour government.
That rally has now fizzled out, with sterling hitting its lowest since 2 July yesterday.
“The Labour honeymoon is likely over,” said ShahabJalinoos, global head of currency research at UBS (via Bloomberg), adding:
“The pound has finally reacted to what has for some time seemed like excessive long positioning.”
Introduction: Pound on track for worst run in a year
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
After a week of volatile trading, the pound is on track for its longest run of losses in a almost a year.
Sterling is heading for its fourth weekly loss in a row, which would be its worst run since last September.
The pound has dropped by two and a half cents against the US dollar over the last month, amid a scramble for safe-haven assets. In mid-July, sterling was worth $1.30 – today, it’s trading around $1.275.
A candlestick chart showing the pound against the US dollar Photograph: LSEG
Last week’s Bank of England interest rate cut, and the prospect of one or two further rate cuts this year, pushed the pound down.
Sterling has also dropped for the last four weeks against the euro.
Alex Kuptsikevich, senior market analyst at FxPro, says market balance has shifted back in favour of sellers.
The British Pound has been under increased pressure over the past few weeks, facing serious resistance as it tries to break important long-term levels against the Dollar and Euro.
The most important reason for the pressure on the pound is monetary policy, as the Bank of England swiftly eased policy in response to falling inflation.
However, the impressive buying of the Euro against the Pound over the past fortnight cannot be overlooked. The fall in EURGBP to near two-year lows has made buying euros against the pound attractive, especially when it appeared that the ECB and the Bank of England were moving at roughly the same pace in easing policy.
The agenda
7am BST: Germany’s inflation rate for July
9am BST: Italian inflation rate for July
1.30pm BST: Canadian jobs report for July
5pm BST: Russia’s Q2 GDP report and inflation data for July
