Every week we bring you the world’s biggest travel, business and currency exchange news. This week: the GBP and FTSE 100 are up; China’s economy experiences strongest growth in 18 months while the US falls to a three year low; the IMF has revised upwards its global growth estimate; Shinzo Abe takes aim at bank board members; and more.
GBP Up
The GBP rose to its highest point since September 2016 to USD 1.28 after a snap election was called by Theresa May. Markets believe that the election will result in a Conservative victory which will bring greater certainty and continuity to the impending Brexit negotiations. At the time of writing the pound was heading strongly towards USD 1.30. The FTSE 100 will also close higher than it started the month for the fifth month in succession.
China
China’s economy grew 6.9% year-on-year in the first quarter of 2017, the best economic performance the country has mustered in a year and a half. Growth was powered by an increase in industrial output of 7.6%.
World outlook
The IMF has increased its global economic forecast to 3.5%, the revision also boosted the UK to a predicted 2% growth – much greater than previously anticipated.
Honest Abe
Shinzo Abe, Prime Minister of Japan is looking to replace two members of the Bank of Japan’s policy committee. The two members have been resistant to the type of economic stimulus that Abe wants to institute. If he is successful it will mean that Abe directly appointed all nine members of the board. Abe’s economic policies could bolster the Japanese economy but weaken the Japanese yen.
Canada US Trade
It has been a tumultuous couple of weeks for Canada-US trade. The Trump administration announced tariffs of 20% on Canadian softwood lumber which has been a longstanding point of contention between the two countries. Trump has also taken shots at Canada’s dairy industry and threatened to tear up NAFTA. After speaking to the Canadian and Mexican heads of state Trump publically changed his mind on NAFTA – in a move that can either be viewed as a negotiating tactic or as a worrying lack of understanding – but the ongoing softwood lumber and dairy disputes could be cause for concern.
No growth in Feb
Canada’s economy failed to grow in February compared to January as total output stayed at around CAD 1.7 trillion. Still, the figure represents a 2.5% year on year growth. Combined with trade uncertainty Canada’s economy may be in trouble and the Bank of Canada is unlikely to raise interest rates any time soon, meaning you shouldn’t expect the CAD to strengthen substantially for a while.
US GDP slowdown
US growth fell to its lowest point in three years in the first quarter of 2017. President Trump had promised growth of 4% during his campaign but achieved an annualised rate of only 0.7% in Q1. Supporters of the POTUS argue that it will take time for his reforms (which include huge tax cuts to businesses and wealthy Americans) to make an impact.
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