The private sector continues to worry that Brexit will have a negative effect on the UK economy, putting the GBP/USD exchange rate fractionally lower to US $1.281.
New research from the Recruitment and Employment Confederation (REC) has revealed a weakening of business confidence during the past month.
In July, optimistic employers outweighed pessimistic employers, with the survey balance clocking in at +6 per cent.
In August, however, the balance turned negative, with the number of employers expecting the economy to worsen rising to 31 per cent, while those expecting it to improve slipped to 28 per cent.
REC Chief Kevin Green said; “Employers in the construction sector are especially concerned as they rely heavily on EU workers to meet the growing demand for housing and to support the government’s infrastructure plans.”
He also added his voice to the growing number in the business sector imploring the government to provide more detail on its Brexit plans in order to lessen the uncertainty facing businesses.
Green said; “The government must do more to create an environment where businesses have clarity. That means clearly laying out what Brexit plans look like and how employers can keep recruiting the people they need from the EU.”
The US dollar is rising moderately this morning as markets eye the Federal Reserve’s Jackson Hole symposium.
Fed Chair Janet Yellen will deliver a speech on Friday.
Given that her term expires in February 2018 and President Donald Trump has been less than complimentary on occasions about her tenure, this could very well be her last address as chief US policymaker.
Yellen faces a similar set of circumstances to former Federal Reserve Chairman Alan Greenspan when he spoke at Jackson Hole in 1999.
High stock prices and low unemployment suggest that the Federal Reserve should continue its hiking cycle, or even pick up the pace of its monetary policy normalisation, yet sluggish inflation growth seems to call for additional stimulus measures.
According to Ethan Harris, Bank of America Corp. head of global economic research, “tightening wins by a vote of two to one”, although the futures market disagrees.
Traders currently have priced in odds of 60.3 per cent that the December monetary policy meeting will see rates left frozen at 1.25 per cent – with the prospect of a rate cut now back on the table, with odds of 2.5 per cent.
The US dollar is therefore being kept on an unsteady footing, failing to advance this morning after President Trump claimed the US will “probably end up terminating NAFTA at some point”.
In a speech delivered at a rally in Phoenix, Nr Trump also claimed that he was prepared to ‘close down our government’ in order to get his Mexican border wall built.
Congress is unlikely to pass a budget that includes provisions for the wall – which the US leader originally claimed Mexico would pay for; a prospect Mexico flatly denies – and the President may therefore veto the deal, leaving the government without a funding deal.