Sterling drops to six-week low against euro
The euro hit its highest level in almost four years against the U.S. currency as investors rushed into safe-haven assets, while remaining cautious about the impact of the U.S.-China trade deal.
The downturn in British manufacturing was less steep than initially feared in May, but output, orders, and jobs continued to decline as companies cited recent tax hikes and U.S. President Donald Trump's tariffs.
"Thursday's data shows the UK economy continues to face challenges," said Nick Andrews, senior forex strategist at HSBC.
"Tuesday's labour market data also loosened more than expected while Wednesday's government spending review did little to lift the outlook for growth but instead turned the focus to where potential tax rises might fall in the Autumn."
British government bond yields and the pound dropped on Tuesday after the release of weaker-than-expected labour market data that showed wage growth slowing to its lowest since September 2024, boosting bets on Bank of England rate cuts.
The pound fell 0.6% to 85.28 pence per euro after hitting 85.37, its lowest since May 2.
Analysts recently flagged that the yield spreads between the UK and the euro area pointed to sterling at 85 pence.
The Bank of England meets next week, and although it is expected to stand pat on rates, money market traders added to bets for additional rate cuts this year.
Money markets fully priced a 25 basis points BoE rate cut by September and 50 bps by year-end.
"We see a strong possibility that the Monetary Policy Committee ditches its hawkish bias, which could pave the way for an August (interest rate) cut," said Matthew Ryan, head of market strategy at Ebury.
The financial market's reaction to British Finance Minister Rachel Reeves's plans was muted on Wednesday, as many economists already expected additional taxes later this year.
Sterling rose 0.4% versus the dollar to $1.3597 .
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
36 minutes ago
- Reuters
Elon Musk must face lawsuit claiming he ran illegal $1 million election lottery
Aug 20 (Reuters) - Elon Musk was ordered on Wednesday by a federal judge to face a lawsuit by voters accusing the world's richest person of defrauding them into signing a petition to support the U.S. Constitution for a chance to win his $1 million-a-day giveaway. U.S. District Judge Robert Pitman in Austin, Texas said Jacqueline McAferty plausibly alleged in her proposed class action that Musk and his political action committee America PAC wrongly induced her to provide personal identifying information as part of the giveaway, late in the 2024 election campaign. Lawyers for Musk and America PAC did not immediately respond to requests for comment. Musk founded America PAC to support Republican Donald Trump's successful 2024 presidential run. McAferty, an Arizona resident, said Musk and America PAC induced voters in seven battleground states to sign his petition by promising that $1 million recipients would be chosen randomly, as in a lottery, though the voters had no real chance to collect. She said voters who signed were also required to provide names, addresses, email addresses and phone numbers. In seeking a dismissal, Musk listed several "red flags" as proof he had not run an illegal lottery. He said these included statements that the $1 million recipients were "selected to earn" the money and expected to become America PAC spokespeople, defeating the idea that the payment was a "prize." But the judge cited other statements suggesting the defendants were "awarding" the $1 million, and the money could be "won." "It is plausible that plaintiff justifiably relied on those statements to believe that defendants were objectively offering her the chance to enter a random lottery--even if that is not what they subjectively intended to do," Pitman wrote. The judge was appointed to the bench by President Barack Obama in 2014. Musk had also rejected the suggestion that petition signers suffered harm by providing contact information. Pitman said an expert in political data brokerage could testify what that information was worth for voters in battleground states. The lawsuit was filed on Election Day, Nov. 5, 2024. A day earlier, a Philadelphia judge refused to end Musk's giveaway, saying that city's top prosecutor failed to show it was an illegal lottery. Musk is a Texas resident, and his electric car company Tesla (TSLA.O), opens new tab is based in Austin. The case is McAferty v Musk et al, U.S. District Court, Western District of Texas, No. 24-01346.
Sky News
44 minutes ago
- Sky News
Europe's sanctions on Russia were to starve Putin's funds - instead something else has happened
Why is Donald Trump threatening to impose sanctions, or tariffs, or maybe both, on India in relation to the Ukraine war? The short answer is that India has established itself as one of the single most important customers for one of the single most important products made in Russia: crude oil. You only have to glance at the data on Russian fossil fuel exports to see what I mean. Nor is it just India. China has raised its imports of Russian fossil fuels by 44% since the imposition of sanctions. Back before the invasion of Ukraine in 2022, by far and away the biggest recipient of Russian energy exports was Europe. Then Europe imposed sanctions on various different Russian products, most notably oil. The idea was to starve Vladimir Putin of the revenues he is using to fund the Russian war machine. Instead, something else happened: those Russian tankers which previously delivered oil to Europe instead started sending it to Indian oil refineries. The Middle Eastern oil tankers that had previously served those Russian refineries began sending their oil to Europe. Nothing, fundamentally, really changed. And while Europeans are no longer taking direct shipments of Russian oil, they are taking plenty of shipments of oil products - from diesel and petrol to kerosene - made from Russian oil in Indian refineries. In the face of this, Europe and its G7 allies have subsequently begun to try to prevent those tankers from taking Russian oil at all. A price cap was imposed on legitimate shipping companies, limiting the amount of revenue Russia could derive from its exports. That, in turn, created another step-shift: Russia began to build up its own "shadow fleet" of tankers which it used to carry on sending oil to India and China. And so, in the latest episode of sanctions "whack-a-mole", the G7 has begun to implement a separate round of bans on that shadow fleet. Now, the point is not that any of these measures were pointless. Each has made a marginal difference in clamping down on Russia and limiting its revenues. But the whole exercise has proved far harder than expected. All of which is why Donald Trump is now talking about raising tariffs or imposing sanctions on India. He has discussed imposing secondary sanctions on countries continuing to do business with Russia. For all that he is being painted as one of Vladimir Putin's closest allies, in reality, these are dramatic economic levers that even Joe Biden stopped short of pulling. The question is whether they do indeed get activated - and what happens next in the game of sanctions "whack-a-mole".
The Independent
an hour ago
- The Independent
Voting machine company linked to Trump conspiracy used LA funds to create slush fund for bribing officials: prosecutors
Employees of Smartmatic, the U.K.-headquartered election technology company, face accusations from federal prosecutors of systematically overbilling Los Angeles County for voting machines used in the 2020 election. The company allegedly used the surplus funds to create a 'slush fund' for bribing government officials, according to a criminal case against three company executives. Smartmatic is involved in a multibillion-dollar defamation lawsuit against Fox News after the network claimed it was involved in conspiracy theories to steal the 2020 election from Donald Trump. Joe Biden defeated the incumbent president in both the popular vote and the Electoral College. Prosecutors in a Florida federal corruption case against Smartmatic co-founder Roger Alejandro Piñate Martinez and two other company officials allege that bribery was part of the company's business model. While the recipients of the alleged misuse of county taxpayer money have not been identified, Dean Logan, the county's top voting official, has reported having regular meetings with Piñate, The Los Angeles Times reports. The allegations also extend internationally with prosecutors claiming similar schemes occurred in the Philippines and Venezuela. Last year, Piñate was charged with bribery and money laundering in the Philippines, where executives are accused of inflating voting machine prices to secure $182 million (£135 million) in contracts for its 2016 election to bribe a top election official. In Venezuela, Smartmatic employees are said to have used a similar fund to buy a home with a pool for a long-time elections official in 2019. This detail surfaced in an August 1 court filing in the Philippines corruption case. In Los Angeles County, where Smartmatic won a $209 million contract for the 2020 election — considered the largest election technology deal in U.S. history — the company allegedly used county money to create a similar type of slush fund. Prosecutors plan to present financial and business records, witness testimony, and electronic communications to strengthen their case, which they claim reveals a broader pattern of bribery. According to the August 1 filing, the company is accused of regularly adding a surplus fee of $10 to $50 per machine sent to the three jurisdictions, with these funds designated for bribes. Federal prosecutors declined to comment on the ongoing criminal case when contacted by the LA Times. Logan, the county's registrar-recorder, stated: 'The county has no knowledge or visibility into how Smartmatic USA used proceeds from that contract. The contract between Los Angeles County and Smartmatic USA was competitively bid, evaluated, and awarded in compliance with the county's open competitive public procurement processes.' A spokesperson for the registrar-recorder's office added that no evidence was found of the surplus charges alleged by federal prosecutors and that the price of machines always remained the same. No federal prosecutors have contacted the department. Smartmatic spokesperson Samira Saba accused the Department of Justice of filing the motion with misrepresentations that were 'untethered from reality.' In a statement, the company asserted: 'Let us be clear: Smartmatic wins business because we're the best at what we do. We operate ethically and abide by all laws always, both in Los Angeles County and every jurisdiction where we operate.' As the federal corruption case against the Smartmatic employees gets underway, L.A. County's Logan faces separate civil allegations that he benefited from a close relationship with company management. This included upscale dinners, a trip to Taiwan and the Maldives, as well as other outings, according to reported county emails and text messages. Logan later stated in a civil case deposition that these were exempt from disclosure because he attended in a 'personal capacity.' The emails and depositions emerged in an unusual 1,000-page public records lawsuit filed this month by Fox News, whose representatives say they need county records to defend themselves against the multibillion-dollar defamation lawsuit brought by Smartmatic. Smartmatic gained widespread recognition in 2020 after Fox News falsely reported that the company, along with Dominion Voting Systems, helped rig the 2020 election against President Trump. This conspiracy was widely pushed by Trump surrogates both on-air and in legal filings that ultimately failed. At the time, Dominion voting machines were used in about two dozen states, while Smartmatic was only used in L.A. County — it's first business in North America. Dominion filed a defamation suit against Fox which was settled for $787.5 million. Smartmatic filed a similar lawsuit in 2021 seeking $2.7 billion. Smartmatic also launched defamation lawsuits against some of its accusers. In addition to Fox News, the company sued Mike Lindell, Newsmax, One America News Network, Sidney Powell, and Rudy Giuliani. As part of its defense, Fox News lawyers have focused on the relationship between Logan and Smartmatic, arguing that the county is withholding crucial records. The network declined to elaborate on the allegations made in the lawsuit when contacted by the LA Times. Logan said in a statement that the county is being used as a pawn in both the civil lawsuit and federal corruption case and said the 'voluminous records' the county released 'refute the salacious allegations.' The federal criminal case against Smartmatic executives started during the Biden administration with charges filed in August 2024. The Trump administration paused most foreign bribery cases after he took office for a second term, but allowed the charges against Smartmatic executives to proceed. Records released to Fox News by L.A. County, which the media company included as exhibits in the civil public records lawsuit, show no evidence of the voter fraud espoused on air by the network's guests in 2020 that led to the whirlwind of conspiracy theories and the subsequent defamation case.
