The Pound’s Little Hiccup: A Quick Update
Morning alarm? Two dot super‑stocks up? Not quite— the British pound wobbled a smidge at 1.22348 around 7:00 AM GMT before settling back into the cozy sideways drift it’s been cruising all day. The culprit? A string of daily dip‑drop moments that have been tripping over themselves since Monday.
Euro’s Big League Comeback
Meanwhile, the euro is having its own little victory parade. It’s pushing back up against the pound, eyeing the all‑time high it flirted with last May— landing at 0.87422 at the day’s peak.
GDP: The Plot Twist
Plot twist alert! The UK’s latest quarterly GDP figures have slipped into the “not bad” zone. Rather than the predicted ‑0.1% contraction, it stuck its head out at a flat 0.0% change from Q3‑previous. More importantly, it grew a solid 0.6% versus last year’s Q3, nudging past the 0.5% expectation.
And the “now‑upon‑now” data? September’s year‑over‑year GDP shot up 1.3%—well above the 1.0% forecast and the earlier 0.5% reading. Month‑to‑month it ticked up by 0.2% after a tweak in methodology.
Sector Snapshot: Things Getting It Back In Gear
- Industrial Production: climbing again like a mountain goat, showing a +1.5% YoY climb in September and stabilizing after two months of falls.
- Manufacturing: the fourth straight month boasting a 3%+ YoY jump—though a touch softer than expected. Month‑over‑month it recovered by +0.1%.
- Construction: a solid +2.8% YoY and +0.4% MoM growth, aligning nicely with forecasts.
- Business Investments: a rough patch—halving to a ‑4.2% drop in Q3 compared to a 4.1% gain the quarter before.
- Trade Balance: mild relief: a smaller-than-anticipated deficit of £14.29 bn—just shy of last year’s low of £14.06 bn.
All signs point to the UK’s economy doing a great angel dance, finding its footing even in a world of tight credit, shaky labor, and the housing market’s twisty road.
More Good Vibes: House Prices & Retail Sales
Sunday’s headline? The Halifax House Price Index finally bounced back—an eight‑month first since October of last year. Retail sales also rose a decent 2.6% in October (BRC Retail Sales Monitor). These numbers help keep the Bank of England comfy with keeping rates high.
Andrew Bailey, the BoE governor, has been saying “no cuts” as his mantra, reinforcing the trend of elevated rates. That steadiness is giving gilts some breathing room: ten, twenty, and thirty‑year yields are finally creeping up after a 20‑day low.
Why the Gilt Market Isn’t As Happy
Even with the modest yield uptick, the iShares Core UK Gilts UCITS ETF (IGLT) still took a slight dip early in the session, after a two‑day surge. So, the gilt market remains cautious. Yet the pound’s dip against the euro is still on the cards.
All Ears: The CK’s Unexpected Calm
Even though the euro has been gaining on the pound for five straight days, the spread between 10‑year European and UK government bond yields is narrowing to a ‑1.565% low. Economies are both trying to show resilience, raise growth, and keep rates high— and that’s what the central bankers want to shout about.
