UK

The pound saw some highs this week, as economic data released showed that;

– demand for UK-manufactured goods has risen to a two-year high (although the fall in the value of the pound is expected to drive up prices in the coming months, according to the latest survey).
– Britain’s economy grew 0.7 per cent in the fourth quarter of the year, an upgrade on the initial estimate, confirming that the EU referendum result had next to no noticeable effect on economic trends in the six months following the vote.
– A second GDP estimate from the Office for National Statistics also upgraded the growth rate in the three months to the end of December to its highest in 12 months, but year on year growth as a whole fell from 2.2 per cent to 2 per cent.
– Although a slowdown in retail sales in January and December had led some economists to wonder whether consumer spending would slow as inflation starts to lower spending power. recent data however shows that lending to consumers grew by £528m in January, up from £249m in December

The pound fell sharply this week, however, when it emerged that;
– The House of Lords had completed two days of debate on Theresa May’s Article 50 bill and the Lords will vote next week on amendments that could pose a headache for Mrs May and her Brexit plans.
– Official data published last week found that retail sales slowed in January as higher costs started to be passed on to consumers
– Now that the UK has announced it is leaving the EU single market, financial institutions in London have largely given up hope of retaining the “passporting” access that allows them to sell products throughout the bloc. Instead, many are looking to take advantage of the EU’s equivalence provisions, which make it simpler for foreign institutions to do business with Europe, as long as Brussels trusts their home countries have similar standards of oversight. This may be a blow or the Uk, as a document has been written setting out Brussels’ goal of a more thorough approach on whether to deem other jurisdictions’ rules as “equivalent” — a vital issue for the City.

US
• Inflation is now at a 5 year high in US
• Political uncertainty is slowing trade growth, a World Bank report has concluded, indicating that the rise of Donald Trump may already be casting a shadow over the global economy. Major international institutions such as the IMF, the OECD and World Bank have recently upgraded their forecasts of global economic growth largely due to expectations that tax cuts, rising infrastructure spending and a wave of deregulation will boost the US economy under the new president. But the report by World Bank economists, released on Tuesday, highlights the fragile state of one historically important engine of global growth — trade. The study avoids naming Mr Trump, but highlights rising protectionism and threats to unwind trade agreements — such as those made by the president. It also raises the prospect that attempts by the Trump administration to force companies to repatriate global supply chains to the US could undermine efforts to boost lagging productivity growth.
• With other business leaders at his side, US President Donald Trump on Friday signed an executive order directing federal agencies to set up task forces to review what regulations can be repealed, that are are “unnecessary”, “burdensome” or “harmful to the creation of jobs and business.”
• President Donald Trump used a victory lap speech at an influential conservative event on to continue his criticism of the media, just hours before the White House prevented several news organizations from taking part in a press briefing
• The dollar has eased week, whilst analysts were expecting indications of another interest rate hike happening possibly any time now, to only be contradicted by the Fed, stating that it currently is in no rush to hike rates

 

  • Brent crude still doing well at approx $56 per barrel

 

  • Gold at over $1250 per ounce

  • S&P still climbing and DJIA remains at record highs.

  • FTSE 100 dropped this week, following news that RBS posted another rloss for the 9th year running.

Other news:
– Economists say the fall in the value of the pound following the EU referendum may be leading UK businesses to source more of their inputs from domestic producers.
– The services sector accounts for about 80 per cent of the UK economy, while manufacturing only makes up 10 per cent, so modest growth in manufacturing is unlikely to offset a slowdown in services..
– Paris will build seven new skyscrapers in its business district as part of an aggressive campaign to lure financial services companies from London after the UK leaves the EU and loses its passporting rights. Immediately after the June 23 referendum, President François Hollande’s socialist government changed the tax rules for expatriates in Paris to make it more generous.
– The approaching presidential election in France and the positive poll results for Ms Le Pen are causing concerns about the unity of the eurozone, which in turn is causing the yield premiums of French government bonds to rise and the euro to ease

 

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