It has been a huge week for the UK economy.
On Tuesday the rate of unemployment rose slightly from 3.5% to 3.6%. This was swiftly followed by higher-than-expected inflation figures on Wednesday. UK inflation is now sitting at a whopping 11.1%, a 41-year high.
Yesterday we saw the Autumn Statement in which a whole range of new policies were introduced. Initial reaction was bearish for the pound with GBP/USD falling over 1% to a low of 1.1758, however late in the day it recovered most of the morning’s losses.
This morning saw some better-than-expected retail sales numbers which has therefore further boosted Sterling. Against the Dollar, Sterling is now ending the week in a better place than it began. This picture is mirrored against the Euro where Sterling looks also set to end the week in a better position.
Overall the consensus is that markets are approaching the Autumn Statement with ‘cautious positivity.’ What remains to be seen is if the government will be able to stick to this plan and deliver on these policies without being defeated in Parliament or forced to U-turn. For a multitude of complex reasons, the House of Commons at present is notably feisty and the media landscape is pretty hostile.
We’ll be taking a deeper dive into the Autumn Statement in Wednesday’s blog.
Next week will be noticeably quieter with no ground-shaking announcements scheduled to come out of the UK, USA or the Eurozone.