The markets keep getting whiplash from domestic politics. Friday was no different, as Labour’s shadow foreign secretary Emily Thornberry became the latest MP to say that Labour would vote against any Brexit deal reached by Prime Minister Theresa May.
Opposition to the Prime Minister is stacking up by the day both in her own ranks and in the ranks of Labour. However, a vote of no confidence would trigger a search for her replacement and detract from trying to find a deal for Brexit when time is already running out.
Carney makes speech to calm market nerves
Mark Carney to the rescue. On Friday the Bank of England governor tried to calm the markets by saying that the BoE and Britain's largest banks are well prepared for a disorderly Brexit.
Speaking at the Irish central bank, he said the BoE has gone through a wide range of scenarios and was well prepared for all Brexit options.
The speech came a day after he reportedly warned the Cabinet that a chaotic Brexit could trigger a financial crisis on the scale of the one seen in 2008- and potentially cause house prices to fall by as much as 35%. The reassuring words were not sufficient for the currency markets and the pound still lost 0.2% against the dollar.
It held almost flat against the euro. The currency’s further direction will also depend on the BoE’s future rate decisions and the Bank recently said that it would decide on potential further hikes depending on how households, businesses and financial markets react to Brexit.
The week ahead
Next Week Britain’s biggest DIY retailer Kingfisher is due to update the market on its latest set of results. This should provide some clarity about how the company is actually doing, irrespective of the weather.
In its August trading update, Kingfisher the owner of B&Q and Screwfix, said that the hot weather boosted demand for barbecues and outdoor furniture, drawing criticism that it was relying too much on an unusually hot British summer for sales and not sufficiently on organic growth.
Online supermarket Ocado, which expanded its presence in the US earlier this year by selling its technology to the country’s second largest supermarket chain, will also provide a trading statement next Tuesday.
The company has grown to a valuation of £6 billion by supplying supermarket chains with automated purchase technology. But it has also spent a substantial amount of money developing the technology and keeping it up-to-date.
The company’s retail division is expected to see annual revenues grow by 10-15%.