Sterling slipped to a three-week low on Tuesday after data showed construction sector activity tumbled in September, and as investors worried about political and economic uncertainty surrounding Britain’s exit from the European Union.
Brexit minister David Davis told the Conservative Party conference on Tuesday that Britain wants to negotiate an exit agreement with the EU but is ready to walk away with no deal, and that officials were “contingency planning” to make sure all scenarios were covered. The comments added to a sense of uncertainty over Britain’s future - both political and economic; signalling fresh uncertainty for GBP.
Despite foreign minister Boris Johnson saying at the conference that the cabinet was united behind every syllable of Prime Minister Theresa May’s recent speech in Florence, the event has been overshadowed by reports of disunity and leadership bids from rivals in the government.
Numbers from the construction sector earlier showed activity suffering the sharpest fall since just after last year’s Brexit vote, on concerns over the economic outlook. Data last week showed speculators had turned positive on the pound for the first time in almost two years in the week up to last Tuesday, with expectations for a Bank of England interest rate hike as well as optimism around Brexit negotiations driving investors to buy back into the currency.
Major automakers on Tuesday posted higher U.S. new vehicle sales in September, as consumers in hurricane-hit parts of the country, in particular southeast Texas, rushed to replace flood-damaged cars.
Analysts and industry consultants had predicted that hurricanes Harvey and Irma would provide automakers with their first monthly gains in 2017. Sales had been weak after a strong run since 2010 that culminated in record sales of 17.55 million units in 2016. However, others warned high inventory levels and record consumer discounts remained a concern moving forward.
Most of the September sales gains came after Hurricane Harvey hit Texas. Replacing cars during the recovery in southeast Texas and Florida will boost U.S. new and used auto sales through at least November, according to industry consultants.
09.30 – GBP – Construction PMI; Forecast at 48.1 against previous of 51.1