Closing post
Time to recap…
The pound dropped to a three-week low after the governor of the Bank of England said it could make bigger cuts to interest rates if the job market slows too quickly.
Andrew Bailey said “slack” was opening up in the UK economy, as higher taxes have squeezed employers.
He told the Times: “I really do believe the path is downward” for interest rates. The bank rate stands at 4.25%, after four quarter-point cuts in the last year, and the Bank is next scheduled to make another decision on 7 August.
Bailey said:
“If we saw the slack opening up much more quickly, that would lead us to a different conclusion.
“I think the path [for interest rates] is down. I really do believe the path is downward but we continue to use the words ‘gradual and careful’ because … some people say to me: ‘Why are you cutting when inflation’s above target?’”
The market-implied probability of a UK interest rate cut in August jumped to over 88% following Bailey’s comments.
European markets have weakened after Donald Trump announced a 30% tariff on EU imports – a threat described as “absolutely unacceptable and unjustified” by Denmark’s foreign minister today.
Germany’s DAX is down 0.8% today, with France’s CAC 40 index losing 0.5%.
The EU’s lead negotiator with the US, Maroš Šefčovič, warned that a tariff of 30% or more would have a huge impact, making it “almost impossible to continue” current transatlantic trade, which is worth €4.4bn (£3.8bn) a day.
Ministers are to consider handing over ownership of the Post Office to its operators after the Horizon IT scandal.
A water company serving 3.9 million customers in London and south-east England has doubled the pay of its chief executive, despite the regulator saying it had “elevated concern” over its financial situation.
Updated
There’s a mixed start to trading in the US market today, as investors ponder President Donald Trump’s latest tariff threats against the EU and Mexico.
The Dow Jones industrial average is slightly in the red, down 17 points or 0.04% at 44,354 points.
The broader S&P 500 index has slipped by almost 0.2%.
