Key events
UK consumer confidence hits highest 12-month high
The closely-watched GfK consumer confidence survey shows that optimism among UK consumers has hit its highest level since December, as the benefits of Bank of England rate cuts start to filter out to everyday Britons.
Confidence around personal finances over the next 12 months rose to 5 in August, up 3 points from July.
It helped overall consumer confidence rise 2 points to -17, which was better than analyst expectations for no change. This was also the best reading since December 2024.
Neil Bellamy, consumer insights director at GfK, said that while sentiment had improved, there were “clouds on the horizon”:
The biggest changes in August are in confidence in personal finances, with the scores looking back and ahead a year each up by three points.
This is likely due to the Bank of England’s August… cut in interest rates, delivering the lowest cost of borrowing for more than two years.
The improved sentiment on personal finances is welcome, but there are many clouds on the horizon in the form of inflation – the highest since January 2024 – and rising unemployment.
There’s no shortage of speculation, too, about what the autumn budget will bring in terms of tax rises.
He added:
While August’s overall index score of minus 17 is the best this year, consumer confidence continues to move in a very narrow band, and there’s no sense that it is about to break out into fresher, more optimistic territory.
The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment.
Powell may find his speech overshadowed by a growing row between Trump and Fed governor Lisa Cook, after the economist declared she had “no intention of being bullied” into stepping down.
Cook has been accused of mortgage fraud, for allegedly claiming multiple properties were her primary residence when applying for home loans.
None of the allegations have been confirmed.
The unfounded allegations were published by Bill Pulte, head of the US Federal Housing Finance Agency, who is a staunch critics of Powell and the Fed.
Pulte has claimed that:
-
In June 2021, Cook entered into a 15-year mortgage agreement on a property in Ann Arbor, Michigan, and declared her intention to use it as her principal residence;
-
In July 2021, Cook bought a property in Atlanta, Georgia, and also committed to use that property as her primary residence when taking out a 30-year mortgage.
On Wednesday morning, Pulte said his agency was investigating a third property owned by Cook.
In a statement, Cook has said:
I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.
For months, the Federal Reserve chair, Jerome Powell, has ignored demands from Donald Trump to cut interest rates and defied the US president’s calls to resign, Callum Jones reports.
On Friday, as Trump ramps up his extraordinary attack on the central bank’s independence, Powell will set out where he thinks the world’s largest economy is headed in a closely scrutinised speech at the Jackson Hole symposium in Wyoming.
As Trump’s erratic trade strategy continues to enshroud the US economy in a fog of uncertainty, investors, economists and officials hope Powell will provide hints of the Fed’s plans for the months ahead.
At five consecutive meetings, the Fed has left rates unchanged, despite the president’s calls for rapid cuts. Before moving, most policymakers wanted more clarity on the economic impact of his policies, including sweeping tariffs on imports, and deportations.
Things might be about to change. At the Fed’s next rate-setting meeting, in September, traders currently put the chances of a rate cut at 73.5%, according to CME’s FedWatch tool.
It would be the first in nine months.
Read more:
UK two-year gilt yields hit highest level in more than two months
Yields on two-year gilts have jumped to their highest level since 9 June, rising three basis points to around 3.999%, as markets priced in later rate cuts by the Bank of England.
Investors have been digesting data released earlier this week, showing that inflation in Britain rose to 3.8% in the 12 months to July. That was up from June’s 3.6% reading, sitting above the central bank’s 2% target for the 10th consecutive month.
Markets are no longer pricing in another rate cut this year, with expectations having been pushed back to spring 2026, with many investors pointing to a cut in April next year.
Exclusive: Elon Musk’s company, Tesla, should have its application to supply energy to UK homes blocked on national security grounds, Ed Davey has told ministers.
The Liberal Democrat leader argued that giving the electric car manufacturer a foothold in the British energy market would be “a gravely concerning move considering Elon Musk’s repeated interference in UK politics”, our political correspondent Eleni Courea reports.
Tesla has a clean energy arm and applied in July for a licence to supply power to British homes.
If the licence is granted by the regulator, Ofgem, the US company could be competing with big UK domestic energy suppliers such as British Gas and Octopus as soon as next year.
In a letter to the energy secretary, Ed Miliband, Sir Ed cited comments by Musk on social media appearing to encourage violent riots in the UK last summer, and accused the Tesla CEO of “peddling misinformation to millions”.
Read more:
Powell’s speech could end up being “legacy defining” and, potentially, his last, according to some analysts, who expect the central bank may not be able to hold onto its leader much longer amid pressure from the Trump administration.
But some are also worried that his comments could end shattering expectations for a September rate cut.
Kevin Ford, FX & Macro Strategist at foreign exchange platform Convera says the conviction for a September cut is based on some shaky foundations, with the market odds of a September Fed cut having fallen from 95% to around 70% in two weeks
Ford says:
The problem is, the market’s conviction is built on some shaky foundations, and Powell’s speech could be the thunderbolt that shatters the calm.
The current atmosphere feels eerily similar to last year, with markets fixated on a September cut. But the underlying data is starkly different. In 2024, the Fed was facing a different beast: a rising unemployment rate and the specter of recession.
This year, after cutting 100 basis points, core inflation is still stubborn and the labor market, while showing some signs of cooling, isn’t screaming for emergency intervention. The economic context is simply not the same, yet the market is pricing in a cut with near-certainty.
This disconnect is what makes Powell’s speech a high-stakes event.
FTSE 100 dips on Friday open after third consecutive record close
The FTSE 100 dropped 0.2% at the start of trading, following its third consecutive record high on Thursday afternoon.
It appeared to reflect a mix of profit taking, as well as investors taking a bit of a breather ahead of Powell’s speech.
There was a mix of stocks at the bottom of the index, with property sales platform Rightmove, software firm Sage Group and wealth manager St James’s Place all down 1% at the market open.
Introduction: Asia shares edge higher as markets await key Jackson Hole speech by US Fed’s Powell
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Asian stocks have cautiously edged higher as global markets turn attention to a much-anticipated speech by US Fed chair Jerome Powell at the central bank’s annual symposium in Jackson Hole, Wyoming.
Powell will be addressing an audience of central bankers, academics and journalists gathered in the Rocky Mountains resort to discuss the finer points of monetary policy. They will be scouring the Fed chair’s speech for any hints about the policy outlook, which could help confirm expectations that a rate cut is on the cards.
This all comes while Powell continues to fend off threats from Trump, who has been calling for Powell’s removal, amid claims he has failed to cut rates fast enough to support Trump’s policy agenda.
Powell has repeatedly argued that the best approach for the Fed right now is to wait and see the impact of Trump’s aggressive tariff strategy before cutting rates.
As for what we can expect from the speech, Gabriele Foà, portfolio manager at Algebris Investments, says Powell is likely to stop short of shutting down expectations for a September rate cut:
Jackson Hole will mark a key opportunity for Fed Chair Powell to signal the policy outlook ahead of September.
Since tariffs were announced, the Fed has leaned toward the side of caution due to the potential impact on inflation.
However, July’s labour market data changed the picture, as large revisions to May and June’s data triggered concerns about the economy. As a result, the market is now fully pricing in a rate cut in September.
Chair Powell will need to use his Jackson Hole speech to balance inflation risks with signs of softer activity. July inflation data show some impact of tariffs on selected components, but not enough to outweigh recent macro weakness.
As such, we expect chair Powell to avoid pushing back against market expectations for a September cut, while remaining more cautious about future meetings.
In the hours ahead of Powell’s speech Asian stocks have edged higher, with the Hang Seng up 0.4%, the Shanghai Composite up 1.2%, and the Japan’s Nikkei 225 nearly flat but up marginally at 0.05%.
The Agenda
