GBP up after better Q2 GDP data
Good morning
Well here we are, the end of the Q3 2026. I’ll say again that this year is going so absurdly quickly. In fairness it feels like I have been away for a fair bit of this quarter which could explain why it seems to have gone by so quickly and even when I was in the UK the weather was so terrific I’m sure I spent some working hours sitting in the sunshine. Feels much more wintry this morning.
UK PM Burnham spoke at the Labour party conference yesterday. He does speak with passion, he did a good job of sounding positive and I do think he will appeal to many people. Overall his speech writers deserve a pat on the back althugh as we had with Starmer there was a little too much about the struggles his parents faced in their time. There was a lot of talk of unity, positivity, and rebuilding services, all sounds fantastic, but do remember someone has to pay for this and there is no detail on how that would happen. Really, we could all come up with a list of ideals but that doesn’t mean we can afford it all, particularly with spending at current levels. Anyway, Burham has possibly almost three years until the next general election to get things working as he wants them although many of his ideas don’t kick in until after the next gebneral election. His key message was ‘hope’. Let’s ‘hope’ he has a bit more behind him than just ‘hope’. Time will tell.
GBP was broadly unchanged through the day against most majors but did trade to three month lows against USD aroun d1.3200 into the London close on dovish comments from BoEs Taylor who said rte increases are not compelling unless energy prices remain high and generate clear second round effects. No great surprise that UK borrowing costs ticked up to within 0.03% of the September high although I have said before we can’t blame Burnham completely given the increase in yields is a global phenomenon. US 30 year yields hit their highest level since 2004 yesterday before pulling back, perhaps helped a little by Feds Williams who said that sticky inflation and a resilient job market could lead to another rate rise this year, he sees inflation falling into next year.
UK GDP data this morning has given GBP a push higher with GBPUSD now up to 1.3270 and GBP has also madde gains against other majors, now 1.1690, 1.9015, 2.3445 and 1.8815 against EUR, AUD, NZD and CAD respectively. It’s a slghtly different story agaisnt Yen, GBPJPY did see a low overnight of 206.90 after a USDJPY sell-off, now back up to the 208.00 area.
Oil prices dropped a touch, WTI is now $89 and Brent $95 as hopes build of a US/Iran agreement over Strait of Hormuz. Oil prices have also been helped by reports that Middle East oil exports have risn to their highest level since the Iran war started. Still, its not helping driver in the UK of diesel cars, as average prices rise to pretty much £2 per litre. Aussie inflation was pretty much in line with expectations overnight, AUD lost a little ground with AUDNZD now 1.2335 and AUDUSD at 0.6970, its lowest level for two months. Still seeing forecasts of another RBA rate rise in November although trhe chances of this are now perhaps slightly lower. Aussie trade data out tonight.
Boeing have been awarded a $20bn contract to build the F/A-XX, the US Navy’s next 6th generation stealth fighter. It is something of a surprise decision given Boeing have also been tasked with building the F-47, the US air forces next generation fighter. Many had thought Northrop would win this contract given so much is now in the hands of Boeing. Regardless, I love jet fighters and can’t wait to see the next generation of aircraft flying, including the UK’s Tempest program that included Italy and Japan.
In sport, England beating Czech Republic 2-0 last night in the Nations League which will give Tuchel a bit of comfort after the Spain loss at the weekend. Alexander-Arnold was on form for England after Tuchel finally relented and played him having tried many others in the right back position ahead of him. Arnold missed the world cup squad, a decision that still surprises and perhaps this latest match has done enough to build Tuchel’s trust in the player. England take on Croatia on Saturday. Meanwhile the football world is waiting to see what punishment will be handed to Man City who were recently found guilty of breaking financial rules for many years. I think something like a 20 point deduction every season for ten years would be reasonable. Tyhey would stay in the Premier League but have little chance of winning the title.
The main event on today’s calendar is the US core PCE release, the Feds preferred inflation measure in Powell’s day but perhaps not under Warsh. Several central bank officials speaking and the Aussie trade data overnight is always of interest.
Have a great day…
- 13.00 German HICP
- 13.30 US core PCE, GDP, personal income/spending
- 14.45 US chicago PMI
- 16.45 ECBs Schnabel speaks
- 20.25 Feds Cook speaks
- 21.05 Feds Goolsbee speaks
- 22.45 NZ building permits
- 23.00 Feds Kashkari speaks
- 00.50 Japan Tankan survey
- 02.30 AUS trade balance, RBA financial stability review
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