Chancellor Sajid Javid was seen waving his metaphorical chequebook at the Tory Party Conference yesterday, including making promises to raise the national living wage to £10.50 per hour whilst lowering the minimum age threshold. Should that promise come to fruition, those affected will have an extra £,1400 per year in their pocket. Sajid Javid’s chequebook frivolity continued as he built on promises that the UK will have a “significant economic policy response” by revealing further infrastructure investment plans.
The pound’s performance for the start of the month can’t match that seen at the start of September, but there is a sustained confidence that a ‘no-deal’ Brexit can be avoided.
Downing Street will, in a series of calls to EU capitals, set out Boris Johnson’s preferred alternative to the Irish backstop ahead of the formal text being delivered to Brussels after his speech on Wednesday.
Reports suggest that a series of custom clearance centres to replace the backstop have been denied – instead reports have been confirmed by senior sources with knowledge of the UK proposals that a full custom border is required, but with added technology to smooth the movement of goods.
Following both reports, Irish Foreign Minister Simon Coveney has commented that it’s time the EU had a serious proposal from the UK, if a Brexit deal is to be achieved this month, suggesting that confidence in the proposal is low. However, it is possible that the reports were leaked in order to ‘test the waters’ before making final amendments.
Yesterday, we saw UK GDP at -0.2% change, Eurozone unemployment fall to an 11-year low by 0.1% to 7.4%, and Australia cut rates to a record low of 0.75%.
Key data releases today include UK Manufacturing PMI, Core EU Flash YoY Inflation Rate, US Manufacturing PMI and Construction Spending, EU PMI, and Mario Draghi speaks later this evening.
Rates at time of writing:
GBP/USD – 1.2295
GBP/EUR – 1.1294
EUR/USD – 1.0887
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