As of Friday morning in London, GBP/USD was exactly unchanged on the week around 1.38 though by 3pm it had rallied almost three quarters of a cent to USD1.3875. The sole reason for this came from across the Atlantic; the latest US labour market report showed that 312,000 jobs had been created in February but the pace of average earnings had slipped back from 2.9% to 2.6%. Stock markets loved this combination and as the DJIA surged more than 300 points, so the US Dollar slipped back against all the major currencies. Whilst the GBP finished the week higher against the USD, it was down against the Australian and Kiwi Dollars at 1.7650 and 1.9015 respectively.
In economic news this Monday morning, credit card company Visa says spending on cards fell again in February, dropping 1.1%, and that the first quarter of 2018 was on track to be the “worst on record”. It said spending by consumers had fallen in nine out the past 10 months. The detailed Visa figures show the amount spent on the physical high street fell 2.6% while households also cut back spending on recreation and culture by 6.1%. The firm noted, “Britons have been in belt-tightening mode since last summer. February’s cold snap certainly didn’t alleviate this situation, particularly when we shine a spotlight on high street spending, and recreation and culture in particular, which saw its biggest decline since April 2010. As we look ahead into March, consumer spending is at risk of posting one of the worst Q1 results on record.”
Investors’ thoughts now turn to Tuesday’s Spring Statement from the Chancellor of the Exchequer (the traditional Budget has now been moved to Autumn). There is the chance of a rare upgrade to UK economic forecasts after the incoming data over the past few months have shown the Office for Budget Responsibility was too pessimistic in its assumptions on UK productivity. Speaking on TV on Sunday, the Chancellor said Britain's debt mountain was still too high and had to be brought down. "There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years. That is a very important moment for us but we are still in the tunnel at the moment… We have a debt of £1.8 trillion - 86.5% of our GDP. All the international organisations recognise that is higher than the safe level." The pound opens in Europe around USD1.3860, GBP/AUD1.7605 and GBP/NZD1.8950.