It was another dramatic day yesterday for the UK as Prime Minister May lost three votes in the House of Commons, one of them confirming that the UK government is in contempt of Parliament and forcing it to publish the full legal advice on Brexit today. As a result, the pound dropped to its weakest since June 2017 against the USD, trading at 1.2659 but remained surprisingly stable against the euro, trading between 1.1190 and 1.1230. The debate will continue in the Commons today and is highly likely to set the tone for sterling fluctuations. The only economic data out of the UK today was the services sector purchasing managers’ index, which revealed that the service sector growth has fallen to near-stagnation in November, with business confidence at its weakest since the Brexit vote. This is an alarming report as services make up roughly 80 per cent of the economic output.
Simultaneously, Data firm Markit has reported that its eurozone PMI composite output index fell to 52.7 last month, down from 53.1 in October, meaning that economic growth across the Eurozone’s private sector companies has hit its weakest level in over two years. Italy remained the weakest-performing country with a PMI unchanged at 49.3, meaning contraction while Ireland, France and Spain recorded firmer growth. However, the strongest EU economy, Germany, recorded its weakest figure in nearly four years.
Today is a national holiday in the US, in honour of the late president George HW Bush, although investors will keep on watching closely the US-China trade war resurfacing.
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