Money

Bank of England policymaker warns UK economy is weak – business live


People relax in the warm weather in London

Photograph: Daniel Leal-Olivas/AFP/Getty Images

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s a beautiful day in the City of London, with many investors in a sunnier mood as they settle down at their computers too.

Signs of progress on two bugbears — the US debt ceiling, and the US-China trade war – is cheering the markets.

Overnight, President Donald Trump reached a deal with Congress that will remove the threat of a new fiscal crisis until at least 2021. The plan clears the way for more US spending, removing the danger of a government shutdown because the national debt had hit the current limit.

Trump declared that the deal was a “real compromise”. Investors will be relieved, as it removes the risk that America could default on its debts (even though it can print all the dollars it ever needs).

It also defuses one potential landmine in the way of Trump’s re-election bid.

Donald J. Trump
(@realDonaldTrump)

I am pleased to announce that a deal has been struck with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy – on a two-year Budget and Debt Ceiling, with no poison pills….


July 22, 2019

Donald J. Trump
(@realDonaldTrump)

….This was a real compromise in order to give another big victory to our Great Military and Vets!


July 22, 2019

Adam Cole of RBC Capital Markets points out the deal has strengthened the US dollar.


The deal raises the debt ceiling to mid-2021… and alleviates one of the risks overhanging policy in the US.

In another welcome sign of progress, US officials are expected to head back to China next week for new talks over the trade war.

The South China Post reported that America’s trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will meet Vice-Premier Liu He. The meeting comes as the two sides appear to thaw their positions.

The US has recently offered exemptions to 110 Chinese products, including medical equipment and key electronic components, from import tariffs. China has also offered an olive branch, allowing several companies to buy US agricultural products without tariffs.

This is giving stocks a lift, particularly technology firms who are vulnerable to the trade conflict.

Asian markets have rallied, with Japan’s Nikkei gaining 1% and China’s Shanghai Composite up 0.5%. European markets are also expected to rise, with the UK FTSE 100 gaining 0.5% in early trading.

DailyFX Team Live
(@DailyFXTeam)

European Opening Calls From IG:#FTSE 7544 +0.38%#DAX 12364 +0.60%#CAC 5593 +0.47%#MIB 21823 +0.40%#IBEX 9202 +0.42%


July 23, 2019

Also coming up today

Investors are adopting a brace position ahead of the results of the Conservative Party leadership election, likely to confirm Boris Johnson will become Britain’s next prime minister.

The prospect of a no-deal Brexit will keep the pound under pressure, while Johnson’s promise of tax cuts and higher spending could sway the bond market (as he’ll have to borrow to pay for it).

The International Monetary Fund will release its latest assessment of the world economy, forecasting how issues such as the US-China trade war and Brexit will hurt growth.

In the UK, the CBI’s monthly manufacturing survey is likely to show weak confidence among UK industrial firms.

The agenda

  • 11am BST: CBI industrial trends report for June
  • 2pm BST: IMF releases latest World Economic Outlook





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