As September began yesterday, we saw the official conclusion that August had been the worst month for Sterling since the aftermath of the Brexit referendum.
August started with Sterling sitting at £1.21 to the US Dollar but over the course of month saw a slow and steady decline, ending down at £1.16. Not a good omen for the ending of summer and the beginning of the darker, colder months of the year.
As we’ve documented regularly in our updates and blogs, the cost of living crisis continues to worsen as the weeks go on and we head towards those long winter nights. It seems not a week goes by without an even worse projection for prices or inflation or almost anything else economic related.
A recent piece by Goldman Sachs has suggested we could see an astonishing 22% rate of inflation as gas prices continue to go through the roof. This comes on top of a leaked treasury report that suggests energy companies could see £170billion in profit from the ever-increasing cost of fuel.
In general, it’s been a bad week for Sterling dropping two points against the Euro as well as the ongoing slide against the Dollar mentioned earlier. We could see a short respite for Sterling as next week there are multiple key economic announcements coming out of both the US and Euro but not much from London.
This week also sees the end of the ongoing Tory leadership election. Polls close at 5pm today with the winner set to be announced on Monday and walking through the door of Number 10 on Tuesday afternoon/evening. Virtually nobody expects anything other than a victory for Liz Truss. It will be the margin of her victory that will be debated. A close margin would indicate a much more divided party than that of a Truss landslide. Look out for our post on Wednesday analysing the result.
Outside of Europe, in the currency world today we have seen the Japanese Yen continue its slide against the dollar hitting a 20+ year low. We looked at the ongoing problems in the Japanese economy in a specific insight article which you can read here.
Next week will see interest rate decisions in Australia, Canada and the Eurozone. We’ll also see inflation figures from China and PMI data from a number of countries including the UK.
To end on something positive, the results of a complex study into a treatment for dementia in California have been published this week. Over 80% of the trial patients saw a reverse in their brain decline. The results of this study will help to formulate new treatments for this disease.