BoE intervenes as IMF criticises UK budget

LONDON - The Bank of England stepped in Wednesday to shore up market confidence after the International Monetary Fund criticised Britain's inflation-fighting budget.

Reacting to markets turmoil, the BoE announced it was temporarily buying up long-dated UK government bonds "to restore orderly market conditions".

However, the pound promptly slumped 1.7 percent to $1.0552.

The BoE intervention followed criticism Tuesday from the IMF, which argued that Britain's budget could increase inequality and worsen inflation.

Credit ratings agency Moody's also waded in overnight with a warning about soaring debt.

Finance minister Kwasi Kwarteng's big tax cuts and energy price freeze, aimed at boosting the UK's recession-threatened economy, appeared to have had the opposite effect as traders warn of ballooning debt to pay for the incentives.

Following last Friday's budget, UK government bond yields have soared and the pound hit a record low at $1.0350.

Critics added that Kwarteng's measures would benefit the rich more than the poorest, as millions of Britons suffer from a cost-of-living crisis.

"We have acted at speed to protect households and businesses through this winter and the next, following the unprecedented energy price rise," the Treasury said as it sought to defend itself.

"We are focused on growing the economy to raise living standards for everyone," it added, blaming sky-high oil, gas and electricity prices on Russia's invasion of Ukraine.

IMF ADVICE

In a highly unusual intervention, the IMF late Tuesday said it was "closely monitoring" developments and urged the government in London led by new Prime Minister Liz Truss to change tack.

The Fund added: "We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting growth via tax cuts and supply measures.

"However, given elevated inflation pressures in many countries... we do not recommend large and untargeted fiscal packages at this juncture."

The IMF said the "UK measures will likely increase inequality" and stressed the importance of fiscal policy not working "at cross purposes to monetary policy".

Analysts warned that Britain's controversial measures could force the Bank of England to hike interest rates far higher than forecast.

"Expectations that there will be a super-size interest rate hike coming from the Bank of England to try and counter the government splurge on tax cuts and spending have increased," Hargreaves Lansdown analyst Susannah Streeter noted Wednesday.

Many central banks, including the BoE, are aggressively hiking interest rates in a bid to cool decades-high inflation. 

TAX CUTS 

In his budget, Chancellor of the Exchequer Kwarteng cut the highest rate of income tax and scrapped a cap of banker bonuses.

He also, however, announced a plan to lower income tax for all workers.

Conservative party head Truss appointed Kwarteng to replace Rishi Sunak, who reached the final two in the race to be prime minister.

Sunak had hit out strongly at Truss's promise of tax cuts, arguing that the UK priority was to first bring down the nation's inflation rate that stands at a near 40-year high of 9.9 percent. 

Moody's called Britain's new fiscal policy regime "credit negative", adding that a sustained confidence shock could "permanently" weaken its debt affordability.

Kwarteng has said he would wait until November 23 to outline plans on controlling government debt.

Agence France-Presse

Pound set for longest losing streak vs euro as Brexit plan disintegrates

LONDON - Sterling fell broadly on Wednesday and was on track for its longest ever losing streak against the euro as Prime Minister Theresa May's last-ditch Brexit plan failed to win over either opposition lawmakers or many in her own party.

With the plan appearing dead in the water, some traders said they saw a rising chance of Britain leaving the European Union without a transition deal.

The pound fell 0.3 percent to $1.2663, its lowest since mid-January, and weakened a similar amount against the euro to 88.135 pence. The sterling is set for its 13th straight day of falls against the euro, measured by London trading prices, the longest such run since the euro began trading in 1999, according to Refinitiv data.

"The action from Labour and eurosceptic Tory members was quite negative and an updated deal passing parliament looks quite distant now," said Nomura FX strategist Yujiro Goto.

"It may depend on the result of the EU parliamentary election over the weekend, but this could mean May resigns over the weekend. It was generally expected by the market, but it became clearer yesterday."

The EU parliamentary election is due to run from Thursday to Sunday, and opinion polls suggest Nigel Farage's Brexit Party will poll strongly.

In mid-March, banks informally canvassed by Reuters saw a diminishing chance of a "no-deal" Brexit.

This week though there were signs some were changing their mind, with JPMorgan upping its probability of a no-deal Brexit to 25 percent from 15 percent. Another bank, Nordea, raised the chance of no-deal Brexit to 15 percent, compared to 10 percent in March while Mizuho strategists now see no-deal chances rising towards 50 percent.

"Personally, I suggest chances of no-deal (Brexit) is nearer 50 percent given the way things are shaping up right now. Looking for lower sterling-dollar trend to continue into the EU election and beyond," said Neil Jones, head of hedge fund currency sales at Mizuho.

Others stuck to previous forecasts ranging around 15-20 percent. JPM also said it was expecting a national election and Brexit delayed to year-end.

Broader market positioning on the pound suggested more volatility in store for the British currency. Outstanding net short positions on the pound were whittled back sharply in recent weeks when hopes grew that May could secure a deal.

With positioning broadly neutral, sterling has become more vulnerable to headline-driven selloffs.

WHAT INFLATION?

Data on Wednesday showed British inflation rose last month by less than investors and the Bank of England had expected. But it still hit its highest level this year, pushed up by higher energy bills.

Yet, with politics dominating currency trading so heavily, there was barely any reaction from sterling.

Money markets now do not expect a BOE rate rise this year and are starting to price out 2020 hikes as well.

Ten-year British government bond yields slipped 3.6 basis points and their yield premium over German debt tightened to its narrowest in six weeks, implying greater demand from British investors for government bonds.

"Brexit, rather than inflation, is at the moment the key driver of interest rates. And with the uncertainties on this front growing rather than falling and no early resolution in sight, rates look set to remain firmly on hold for the time being," said Rupert Thompson, head of research at Kingswood.

(Reporting by Saikat Chatterjee and Abhinav Ramnarayan; Editing by Tommy Wilkes, Andrew Heavens and Alexandra Hudson)

source: news.abs-cbn.com

Dollar sags after soft US wages data, Brexit woes weigh on pound

TOKYO - The dollar struggled near 3-1/2-week lows against its peers on Monday after US jobs data showed slower-than-expected wages growth, while the pound retreated as a key member of Britain's cabinet resigned over Prime Minister Theresa May's Brexit plan.

The dollar index against a basket of six major currencies was 0.1 percent lower at 93.962..

It had lost nearly 0.5 percent on Friday and stooped to 93.921, its lowest since June 14, after closely-watched US wages indicators disappointed the market.

Data on Friday showed average US hourly earnings gained five cents, or 0.2 percent in June after increasing 0.3 percent in May. This pointed to moderate inflation pressures that dented expectations that the Federal Reserve would raise interest rates a total of four times in 2018.

Nonfarm payrolls did rise by a stronger-than-expected 213,000 in June, Friday's data also showed, although this had little impact on currencies.

"The wages component has been the focal point for the market for a while now, rather than the non-farm payrolls, and the dollar slipped accordingly. The flattening of the US yield curve, perhaps reflecting worries about the economic impact of trade conflicts, is also a key factor weighing on the dollar," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

The 10-year Treasury yield fell to its lowest level in nearly six weeks on Friday. As a result the spread between the two- and 10-year yields was at its flattest in 11 years.

The dollar was little changed at 110.42 yen after losing 0.2 percent on Friday.

The euro was 0.1 percent higher at $1.1752. The single currency had risen 0.45 percent on Friday, when it brushed $1.1768, its strongest since mid-June.

The pound was effectively flat at $1.3295.

Sterling had climbed to $1.3328 earlier in the session, its highest since June 14, before pulling back after sources told Reuters British Brexit Secretary David Davis had resigned in a blow to Prime Minister Theresa May.

"The latest headlines are negative for the pound, but there are underlying expectations for the Bank of England to raise rates and that could help limit potential losses," Ishikawa at IG Securities said.

source: news.abs-cbn.com

US stocks drop again on rate hike fears; British pound tumbles

NEW YORK - Global equities fell Wednesday, with Wall Street dragged lower on worries about higher interest rates, while the British pound tumbled as Brexit talks with the EU hit another stumbling block.

US stocks dropped for the second straight session, as investors continued to digest Tuesday's congressional testimony from new Federal Reserve Chairman Jerome Powell that sparked talk the US central bank would accelerate the pace of interest rate hikes. 

Those worries also dogged markets on Wednesday, analysts said.

"I think it's just a concern about higher interest rates," said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

"Unfortunately, we may have to wait for first-quarter earnings to kind of break out of the cycle we're in."

Wall Street equities were also pressured by hefty declines in petroleum-linked shares following a bearish US oil inventory report.

The Dow finished down 1.5 percent. 

Equity markets in Paris, Frankfurt and London all fell, along with Asian markets, which took their lead from Wall Street. Sentiment also took a hit with news of the third successive monthly fall in China's purchasing managers' index (PMI) survey of factory activity. 

The index reached a 19-month low in February. That news weighed heavily on London's energy and mining sectors because the Asian powerhouse economy is a top consumer of raw materials.

The dollar continued its advance against the euro and moved sharply higher against the British pound after British Prime Minister Theresa May angrily rejected the EU's draft proposal for Brexit.

The EU proposes keeping British-ruled Northern Ireland in a customs union if there is no better solution to avoid a hard border with EU-member Ireland, and its chief negotiator said the pace of trade talks needs to pick up to reach a deal this year.

"The comments reminded investors of the long road and difficult road ahead for the Brexit talks and added to the pound's heavier tone against the dollar overnight," said Omer Esiner, analyst at Commonwealth FX.

KEY FIGURES AT AROUND 2200 GMT (6 a.m. Thursday in Manila)

New York - DOW: DOWN 1.5 percent at 25,029.20 (close)

New York - S&P 500: DOWN 1.1 percent at 2,713.83 (close)

New York - Nasdaq: DOWN 0.8 percent at 7,273.01 (close)

London - FTSE 100: DOWN 0.7 percent at 7,231.91 (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 12,435.85 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,320.49 (close) 

EURO STOXX 50: DOWN 0.6 percent at 3,438.96 (close)

Tokyo - Nikkei 225: DOWN 1.4 percent at 22,068.24 (close)

Hong Kong - Hang Seng: DOWN 1.4 percent at 30,844.72 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,259.41 (close)

Euro/dollar: DOWN at $1.2201 from $1.2233

Pound/dollar: DOWN at $1.3769 from $1.3909

Dollar/yen: DOWN at 106.71 yen from 107.33 yen

Oil - Brent North Sea: DOWN 85 cents at $65.78 per barrel

Oil - West Texas Intermediate: DOWN $1.37 at $61.64 per barrel

source: news.abs-cbn.com

Asia stocks and pound sag ahead of British PM's Brexit speech

TOKYO - Asian stocks and the pound sagged on Tuesday ahead of a speech by British Prime Minister Theresa May that could have implications for broader risk sentiment.

Media have reported that May, due to speak later on Tuesday, will lay out plan to exit the European Union that would see Britain lose access to the bloc's single market.

Fears of such a "hard Brexit" have beaten sterling down to three-month lows against the dollar and sapped broader investor appetite for equities this week.

Growing uncertainty over the policies of Donald Trump have also hurt equities, which had rallied in many parts of the world thanks to speculation that the US President-elect would enact bold stimulus and reflationary measures once in office.

"Markets affected by the twin political black swans of 2016 - the Brexit vote and Trump win - remain volatile and uncertain," wrote David Croy, senior rates strategist at ANZ.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.2 percent. Trade was thin with Wall Street closed on Monday for Martin Luther King Day.

Japan's Nikkei fell 0.3 percent and Australian stocks were down 0.8 percent.

Sterling was down a fraction at $1.2037. It had plunged to $1.1983 the previous day, its lowest since Oct. 7.

The pound's losses helped take some pressure away from the greenback, which has been burdened by investor uncertainty over the incoming Trump administration's policies.

The euro was little changed at $1.0601 after dipping about 0.4 percent overnight.

The yen benefited from its safe-haven status, holding its gains versus the dollar, euro and sterling. The dollar was down 0.1 percent at 114.085 yen having gone as low as 113.610 the previous day, its weakest since Dec. 8.

Gold was helped by the heightened risk aversion stemming from Brexit and uncertainty over Trump's plans. Spot gold was $1,203.70 an ounce after climbing to $1,207.86 overnight, its highest since late November.

Crude oil was higher as Saudi Arabia's steady commitment to reduce production offset a report forecasting U.S. output would rise again this year.

US crude was up 0.3 percent at $52.52 a barrel.

source: news.abs-cbn.com

World stocks choke on US election fears, pound powers on

NEW YORK - Equity investors froze Friday at the prospect of a tight finish to the US presidential race, with the US S&P 500 sliding for the ninth straight session, its longest fall since 1980.

Investors took refuge in safe havens ahead of the weekend that could bring more surprises affecting the hot race between Democrat Hillary Clinton and Republican Donald Trump, and amid concerns a Trump victory could bring sharp shifts in US economic policy.

Gold prices rose, the dollar dropped and US bond yields fell despite solid US jobs market and trade data that pointed ever more to a rate hike by the Federal Reserve in December.

Tokyo stocks lost 1.3 percent, London fell 1.4 percent, and Paris and Frankfurt bourses slipped 0.8 percent and 0.7 percent, respectively, as caution reigned.

On Wall Street, losses were lighter, with selling coming at the end of the session, leaving just one trading day before the November 8 vote.

The three key indices all lost about 0.2 percent, putting the S&P 500 down 3.1 percent since its slide began.

"Not good, but not as bad as it sounds," given the relatively modest loss for such a streak, said Howard Silverblatt of S&P Global.

And Chris Low of FTN Financial said, "The last time the market was at this level was back in early July, right after the terrible Shanghai selloff.

"If we break through these levels technically, it could be a difficult month or two after that."

Clinton, who has promoted mostly continuity with the political, economic and tax policies of President Barack Obama, still leads Trump in the race. But the separation between the two has narrowed to two percentage points and the outcome of the vote could depend on a handful of swing states the candidates are battling for.

"Investors are clearly nervous or worried that there might be a big surprise Tuesday. That's the reason why the market's been drifting down," said Hugh Johnson of Hugh Johnson Advisors.

US ECONOMY SHOWS STRENGTH

A solid US October jobs report gave more support for the Federal Reserve to raise rates in December. The economy added 161,000 jobs last month and the unemployment rate dipped to 4.9 percent.

Fed Vice Chair Stanley Fischer said in a speech that the labor market is in a "powerful" recovery and that inflation is picking up, while not speaking directly to the Fed's next policy meeting in five weeks.

While this would normally strengthen the case for a Fed rate hike in December, much still hinges on Tuesday's vote, said John Higgins at Capital Economics.

"US monetary policy would be expected by many to remain looser for longer in the event of a win for Trump," he said.

POUND UP ON BREXIT POLITICS

The British pound though powered higher on Thursday's London court ruling that the British government would need parliamentary approval to officially move to pull out of the European Union.

The pound pushed up to $1.2519, its highest level in a month.

"The High Court ruling has introduced a whole new set of political uncertainties," Rabobank analyst Jane Foley told AFP.

"However, since most of these are seen as reducing the chances of a bitter divorce from the European Union's single market, the pound is better supported."

Oil prices meanwhile fell again amid talk Saudi Arabia may raise output again to bring prices down if Iran fails to agree to OPEC production cuts.

- Key figures at 1900 GMT -

New York - Dow: DOWN 0.2 percent at 17,888.28 (close)

New York - S&P 500: DOWN 0.2 percent at 2,085.18 (close)

New York - Nasdaq: DOWN 0.2 percent at 5,046.37 (close)

London - FTSE 100: DOWN 1.4 percent at 6,693.26 (close)

Frankfurt - DAX 30: DOWN 0.7 percent at 10,259.13 (close)

Paris - CAC 40: DOWN 0.8 percent at 4,377.46 (close)

EURO STOXX 50: DOWN 0.6 percent at 2,954.53 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 16,905.36 (close)

Hong Kong - Hang Seng: DOWN 0.2 percent at 22,642.62 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,125.32 (close)

Pound/dollar: UP at $1.2519 from $1.2463 Thursday

Euro/pound: DOWN at 88.96 pence from 89.12 pence

Euro/dollar: UP at $1.1137 from $1.1107

Dollar/yen: UP at 103.04 yen from 102.93 yen

Oil - Brent North Sea: DOWN 77 cents at $45.58 per barrel

Oil - West Texas Intermediate: DOWN 59 cents at $44.07

source: www.abs-cbnnews.com

Global markets: Asia shares slip as US earnings disappoint, dollar gains

TOKYO - Asian shares flirted with three-week lows on Wednesday after a dour start to Wall Street's corporate earnings season knocked US stocks, while the dollar and Treasury yields rose on growing expectations of a US rate hike in December.

The British pound jumped back from lows in a volatile trading session though concerns about a "hard Brexit" are likely to keep the currency under pressure.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent while Japan's Nikkei futures slipped 0.7 percent.

On Wall Street, US S&P 500 Index fell 1.2 percent to near one-month low, and dipped below its 100-day moving average - seen as a major support - for the first time since June.

Shares of aluminum producer Alcoa tumbled 11.4 percent and diagnostics test maker Illumina plummeted 24.8 percent following their disappointing earnings, casting a pall over the market.

Market participants are also increasingly eyeing politics as the Nov. 8 U.S. elections draw near. The turmoil enveloping Republicans and the party's presidential candidate Donald Trump is prompting some speculation that a victory by Democrat Hillary Clinton could be accompanied by big gains for her party in Congress, investors said.

At the same time, investors are bracing for the US Federal Reserve to raise interest rates by the end of the year, most likely in December.

"The markets had relied on expectations of monetary stimulus for a long time but that is changing with bond yields rising around the world. You have rising interest rates and falling EPS. That's obviously bad for stocks," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The 10-year US Treasuries yield rose to 1.781 percent, its highest level since early June.

US interest rate futures are pricing in about 75 percent chance of a rate hike by December, little changed over the past couple of days.

The specter of rising US interest rates helped to lift the dollar's index against a basket of six major currencies to its highest level in seven months.

The index stood at 97.511, after having risen to as high as 97.758 on Tuesday, climbing above its July peak of 97.569.

The euro hit a two-month low of $1.1049 and last stood at $1.1061 while the offshore Chinese yuan traded at 6.7290 yuan to the dollar, near its lowest since January.

The yen was little changed at 103.42 to the dollar.

The British pound jumped 1.3 percent in thin early Asian trade to $1.2275, after having fallen nearly five percent in the previous four sessions.

Some market players suspected sterling benefited from a report by Bloomberg that British Prime Minister Theresa May has accepted that Parliament should be allowed to vote on her plan for taking Britain out of the European Union.

"The pound is being bought back after its big falls. But given that Brexit will remain a major theme for the markets, its likely to be capped," said Shinichiro Kadota, chief currency strategist at Barclays Securities Japan.

Oil prices retreated from one-year highs, after OPEC said it was trying to reach a global agreement to cap production for at least six months amid doubts about how much that would reduce a crude glut.

source: www.abs-cbnnews.com

Global markets: Mexican peso rises after Trump-Clinton debate, pound falls

LONDON - Sterling fell again on Monday, after largely recovering from Friday's "flash crash", while the Mexican peso and US stock futures rose as investors saw less chance of Republican nominee Donald Trump winning next month's presidential election.

The pound dropped half a percent against a dollar boosted by expectations the Federal Reserve will raise interest rates in December even after slightly weaker than expected jobs data on Friday.

The UK currency last stood at $1.2402, down 0.2 percent. Its trade-weighted index fell 0.7 percent to its lowest since early 2009.

"I guess that we have to prepare for further weakness," said Hans Redeker, head of G10 currency strategy at Morgan Stanley in London.

In early Asian trade on Friday, it fell 20 percent to a three-decade low of $1.1491 in minutes as a fall on investor concerns over Britain's impending exit from the European Union snowballed as automated computer trades were triggered.

Britain's FTSE 100 fell 0.1 percent but outperformed other major European stocks as the internationally-focused companies on the index gain on overseas revenues and competitiveness when the pound fall.

The more domestically-focused FTSE 250 index was down 0.2 percent and British 10-year government bond yields rose 1.3 basis points to 0.992 percent.

The pan-European STOXX 600 index fell 0.4 percent. One of the leading decliners was Deutsche Bank, down nearly 3 percent after Chief Executive John Cryan failed to secure a speedy deal with the US Department of Justice at the weekend over the misselling of mortgage-backed securities.

For Reuters' new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Another notable mover on currency markets was the Mexican peso, which at one point was up 2 percent at 18.91 to the dollar as Trump's chances of winning the White House seemed diminished after the second pre-election debate with Democratic Party candidate Hillary Clinton.

Trump has vowed to build a wall on the border with Mexico and renegotiate or scrap the North American Free Trade Agreement (NAFTA) if he is elected, making the peso somewhat of a barometer of his chances. The Mexican currency was last up 1.9 percent at 18.96 per dollar.

A CNN/ORC snap poll of debate watchers found that 57 percent thought Clinton won the encounter, versus 34 percent for Trump.

US stocks index futures were up about 0.2 percent, suggesting Wall Street will open higher. US stock markets are open on Monday, though the bond market is closed for the Columbus Day holiday.

Earlier, Asian shares eked out minor gains. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent. Japanese markets were closed for a holiday.

Chinese shares racked up their biggest gains in two months as investors returned from a week-long holiday and caught up with gains on global markets.

YUAN

China's yuan, however, hit a six-year low against the dollar before recovering. The People's Bank of China set the weakest fix for currency since September 2010 and in the spot market fell as low as 6.7051, also its lowest since September 2010.

It last traded at 6.7025, down just 0.03 percent on the day.

Oil prices fell, with investors skeptical an agreement among members of the Organization of the Petroleum Exporting Countries (OPEC) to cut output would have a major impact.

Brent crude, the international benchmark, was down 18 cents at $51.73 a barrel.

"A meeting between OPEC and non-OPEC producers (namely Russia) will add to oil headlines this week. Don't expect a firm agreement from Russia, but headlines about cooperation are likely," Morgan Stanley said.

Gold last traded at $1,263 an ounce, up 0.6 percent, lifted by demand from returning Chinese investors.

source: www.abs-cbnnews.com

British shoppers defy Brexit shock as spending jumps in July

LONDON - Shoppers in Britain shrugged off June's shock Brexit vote as retail sales jumped by much more than expected last month, adding to signs there has been little immediate hit for consumers.

Warm weather boosted clothes sales and the pound's plunge tempted overseas buyers to splash out on luxury items such as watches and jewelry, official data showed on Thursday.

These are the first official figures to shed light on how consumer demand has performed since the unexpected decision by voters to leave the European Union in the June 23 referendum.

Data released earlier this week also showed little immediate impact of the Brexit vote on the labor market but there were signs of inflation pressures building after the plunge in sterling, which could eat into the spending power of households going forward.

Sentiment surveys have shown levels of concern, but actual retail sales volumes surged 1.4 percent in July compared with June, the Office for National Statistics said, topping all forecasts in a Reuters poll that pointed to a much smaller rise of 0.2 percent.

The pound rose half a cent against the dollar and British gilt (bond) futures pared gains after the data release.

"This positive surprise is encouraging for (third quarter) growth, but with consumer confidence having plunged in the wake of Brexit and business surveys suggesting growing caution, we doubt that it is sustainable," said James Knightley, economist at ING.

"Inflation is starting to rise and will continue to do so due to the steep fall in sterling, meaning that real household income growth will weaken. This is likely to limit retail sales growth in coming quarters."

BANK OF ENGLAND WATCHING

The ONS retail sales figures are volatile and Bank of England policymakers will want to see more than one month's data before drawing firm conclusions about the health of consumer spending - a key pillar of British economic recently.

"Better weather this year could be a major factor with sales of clothing and footwear doing particularly well," said Joe Grice, chief economic adviser at the ONS.

"There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend."

Sales of watches and jewelry were up 16.6 percent in July compared with the same month last year - the biggest jump in nearly two years.

Major retailers including Tesco, Next and John Lewis say they have not been affected so far by the referendum result, while the British Retail Consortium also said spending in shops bounced in July.

But the long-running GfK survey - the main measure of consumer morale and an indicator of future household spending over the years - suffered its sharpest drop since 1990 last month.

Compared with a year earlier, July sales growth jumped to 5.9 percent, the biggest rise since September of last year and far stronger than the 4.2 percent forecast, Thursday's data showed.

The BoE more than halved its forecasts for household spending over the next two years in light of the vote to leave the EU. It now expects growth in spending of 1.0 percent and 0.75 percent in 2017 and 2018 respectively as lower growth in wages and higher inflation eat into spending power.

source: www.abs-cbnnews.com