The Monday note - 29 January 2018

• The FTSE 100 index fell by nearly 50 points last week to close at 7,665.5 on Friday, as the pound strengthened on upbeat UK economic news. The ten year Gilt yield softened to 1.44%. 
• UK GDP for Q4 2017 came in ahead of forecasts at 0.5% growth, quarter-on-quarter, up from 0.4% in Q3. The figures benefited from stronger growth for the financial and business services sector. 
• The UK unemployment rate remained steady at 4.3% in November 2017, while the employment rate stood at 75.3%. However, despite the tight labour market, wages grew by just 2.5%, which is less than inflation. 
• Ireland’s central bank is predicting the country’s GDP will grow by an impressive 4.4% in 2018, and 3.9% in 2019, as stronger growth in the US and the Eurozone improves prospects for exports. 

Chief Economist comments: 

The Brexit cloud over the UK economy is starting to dissipate, as shown by the pound hitting $1.41 on Friday. In the week prior to the 2016 referendum, sterling was trading between $1.42 and $1.49. With the labour market refusing to deteriorate, and growth improving, it is tempting to use the word ‘recovery’. However, to maintain momentum the politicians must keep their Brexit expectations real. Sadly, the Sunday newspapers saw the usual suspects rocking the boat again.