Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

London Underground strikes this week called off; pound hits six-month low against dollar – as it happened

Greggs Inflation Gregg (Organization) United Kingdom United States Helen Dickinson Sam Bankman-Fried BRC The British Retail Consortium
Passengers leaving an Underground Station in London today
Passengers leaving an Underground Station in London today Photograph: Neil Hall/EPA

Closing summary

Time for a recap:

Two planned strikes on the London Underground this week have been called off following “significant progress” in talks over jobs and conditions.

About 3,000 Rail, Maritime and Transport (RMT) union members were due to strike on Wednesday and Friday, but the industrial action is now cancelled.

The RMT union said the strikes had been called off after “significant progress” in talks with London Underground at conciliation service Acas.

Nick Dent, London Underground’s director of customer operations, has said:

“We are pleased that the RMT has withdrawn its planned industrial action this week and that the dispute on our change proposals in stations is now resolved.

“This is good news for London and we will continue to work closely with our trade unions as we evolve London Underground to ensure we can continue to support the capital in the most effective way.”

The pound has slipped to its lowest level against the US dollar in six and a half months, below $1.21, as ‘king dollar’ continues to strengthen.

Fears of a UK recession are also weighing on sterling, analysts say.

Japan’s yen weakened to a near one-year low, before a rebound which created speculation that Tokyo had stepped in to support the currency.

Britain’s cost of living crisis has eased, with food prices dropping by 0.1% on a monthly basis in September, the first such fall in two years.

The British Retail Consortium said last month’s fall in average food prices helped to bring down overall shop price inflation to 6.2% in September, down from 6.9% in August – the lowest annual rate since September 2022.

Bakery chain Greggs has confirmed that cost inflation has eased, and pledged to resist any price rises before Christmas.

On the economic front, the number of US job vacancies has jumped to 9.6m for August, which is likely to create pressure to maintain high interest rates for longer.

Ronald Temple, chief market strategist at Lazard, explains:

“US economic strength continues to surprise on the upside. Today’s job openings imply 1.5 open jobs per unemployed person despite the sharpest tightening in monetary policy for decades.

I believe the Fed’s rate hike cycle is likely over, but data like today’s pose the risk that one more hike might be needed.”

Here’s the rest of today’s stories:

Shares in the embattled Chinese property developer Evergrande jumped after trading resumed in Hong Kong after their suspension last week.

Mark Zuckerberg’s Meta is considering charging users in the EU €13 (£11) a month to access an ad-free version of Instagram or Facebook on their phones, as the company grapples with regulatory pressure on how it uses people’s data.

Boohoo has warned that sales will fall by more than expected this year as shoppers buy fewer items than hoped for amid heavy competition from the Chinese rival Shein and the revival of high street shopping.

The owner of the airline easyJet has launched a legal action to force a Leicester band to change their name, accusing the members of Easy Life of being “brand thieves”.

Updated

Back in the currency markets, Japan’s yen has weakened below the ¥150 to the dollar mark for the first time in nearly a year.

But, it then rebounded, creating speculation that Japanese authorities may have intervened to prop up the yen.

Wall Street is in the red in morning trading in New York, as today’s stronger-than-expected data on US jobs opening worries investors.

The Dow Jones industrial average has lost 384 points, or 1.15%, to 33,049 points, while the tech-focused Nasdaq Composite is down 1.6%.

Rubeela Farooqi, chief US economist at High Frequency Economics, explained in a note:

“With job openings remaining well above levels recorded prior to the pandemic and moving in the wrong direction in August, these data support a higher for longer message on rates from the Fed and will likely keep the FOMC open to another rate hike this year,”

US JOLTS shows rise in vacancies

Newsflash: The number of job vacancies in the US has jumped.

There were 9.6m job openings on the last business day of August, the U.S. Bureau of Labor Statistics reports, a sharp increase on the 8.9m openings at the end of July.

That suggests demand for workers is still high, despite the pressure from the rise in interest rates, which could lead the US Federal Reserve to maintain borrowing costs at high levels for longer.

The Bureau of Labor Statistics reports:

Over the month, job openings increased in professional and business services (+509,000), finance and insurance (+96,000), state and local government education (+76,000), nondurable goods manufacturing (+59,000), and federal government (+31,000).

The number of workers quitting their jobs was little changed, at 3.6m – leaving the quits rate unchanged at 2.3%.

Back in the financial markets, recession fears are weighing on the pound, according to George Pavel, general manager at Capex.com Middle East.

The dollar was volatile today but remained on a bullish trajectory overall supported by traders’ confidence in the resilience of the US economy which was reinforced by the stronger-than-expected PMI data. Additionally, Federal Reserve members maintained a hawkish stance, emphasizing the necessity of keeping interest rates elevated for an extended period. This helped keep yields near this year’s peak which could continue to support the dollar.

Conversely, the euro faces mounting selling pressure as traders factor in the end of the current tightening cycle. Economic data, particularly for Germany, indicates a deterioration in the economic situation.

The British pound remains weak due to heightened concerns about an impending recession in the UK. If they remain elevated, current interest rates could also weigh on the economy and on the value of the pound.

Although the London Underground strikes this week have been called off, train drivers union ASLEF is still holding a strike on Wednesday.

Aslef members have also been conducting an overtime ban this week, which also causes disruption to sevices.

Labour MP Jon Trickett tweets:

Nick Dent, London Underground’s director of customer operations, has said:

“We are pleased that the RMT has withdrawn its planned industrial action this week and that the dispute on our change proposals in stations is now resolved.

“This is good news for London and we will continue to work closely with our trade unions as we evolve London Underground to ensure we can continue to support the capital in the most effective way.”

The strikes which have now been called off would have caused severe disruption across the whole Tube network.

Transport for London had predicted that most Tube services would be severely affected or will not run on strike days, with a knock-on impact on services the next morning too.

The RMT also say that negotations at conciliation service ACAS have delivered progress in their dispute with London Underground Limited (LUL).

Announcing that strike action on London Underground has been suspended, the union explains:

Following talks at ACAS, RMT has managed to save key jobs, prevent detrimental changes to rosters and secure protection of earnings around grading changes.

The significant progress means that key elements have been settled although there remains wider negotiations to be had in the job, pensions and working agreements dispute.

Planned strikes by London Underground workers called off

Newsflash: Strike action on London Underground planned for later this week has been suspended.

The RMT union has announced that strike action planned for Wednesday 4th and Friday 6th October will now not go ahead. They had been called as part of the long-running dispute over jobs and conditions.

This follows “significant progress” made by RMT negotiators and London Underground Limited (LUL) representatives, the union says.

RMT general secretary Mick Lynch said:

“I congratulate all our members who were prepared to take strike action and our negotiations team for securing this victory in our tube dispute.

“Without the unity and industrial power of our members, there is no way we would have been able to make the progress we have.

“We still remain in dispute over outstanding issues around pensions and working agreements and will continue to pursue a negotiated settlement.”

Update:London Underground’s director of customer operations, Nick Dent, has said they are pleased that the RMT has withdrawn its planned industrial action this week and that “the dispute on our change proposals in stations is now resolved” (full quote here).

Updated

There’s drama in the bond market, where the interest rates on long-dated US government debt have hit the highest level in 16 years:

The strength of the US dollar has pushed the Russian rouble to a six-week low.

The rouble weakened to 100 to the US dollar this morning, for the first time since mid-August (when it hit a 16-month low).

Reuters says the rouble is being “weighed down by foreign currency outflows and the country’s shrinking current account surplus”.

The rouble’s slump in August prompted Moscow’s central bank to hold an extraordinary meeting at which it hiked interest rates by 3.5 percentage points in an emergency move to support the currency.

The UK’s insurance sector’s ability to cope with a market crisis will be tested in 2025.

The Bank of England has announced it will run a “dynamic” stress test for the general insurance sector in 2025, which will assess its resilience to a marketwide crisis.

The BoE’s Prudential Regulation Authority, which supervises insurers, said this stress test will be “a significant change from previous exercises”. It will involve simulating a sequential set of adverse events over a short period of time to see how insurers cope.

The test would assess the solvency, liquidity and risk management of the general insurance industry (which offers home insurance and motor car cover, for example).

A weaker pound will push up the cost of imports from abroad.

Sterling is slightly lower against the euro today, at €1.152, down from around €1.177 in August (and €1.30 before the 2016 Brexit vote).

Mark Jones, partner at law firm Gordons, warns that it could undermine the move to lower food prices (which dropped 0.1% month-on-month in September, new data today shows).

Jones explains:

“Whilst it is good to see even a 0.1% fall in food prices, consumers shouldn’t get too excited by the news. Prices will continue to rise and we’re likely to see a significant increase in the new year.

Commodity prices are spiking again, the pound has weakened and suppliers to the supermarkets tend to agree increased prices which take effect in January. In the last three months, oil has gone from $70 a barrel to around $90 and given we import around 42% of our food, a falling pound won’t help food prices stay low.

We have at least another six months of rising prices.”

“King dollar” has returned to rule over the foreign exchange markets, says Marios Hadjikyriacos, senior investment analyst at XM, adding:

The world’s reserve currency has staged a phenomenal rally in recent months, empowered by the stunning rise in US yields, solid economic fundamentals, safe haven flows, and the absence of any attractive alternatives.

Pound hits new six-month low

The pound has dropped to its lowest level against the US dollar since mid-March this morning.

Sterling has dipped to $1.2059 this morning, a six and a half-month low.

The slide came as the dollar hit its highest level of 2023 against a basket of currencies. It has been strengthening due to concerns that interest rates will stay high for longer than expected, thanks to the strength of the US economy.

Yesterday, manufacturing data showed that America’s manufacturing sector was close to recovery, while last week’s jobless claims figures remained historically low. That could encourage the US Federal Reserve to raise interest rates on more time this year.

In contrast, the Bank of England may have ended its hiking cycle, after leaving UK interest rates on hold last month.

September was the worst month in a year for the pound, against the US dollar, and October has not started strongly either.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:

The dollar’s strength is set to compromise other countries efforts to bring down inflation as their weaker currencies in the face of the greenback’s strength makes imports more expensive.

The pound has been sent reeling again to $1.207, the lowest levels since mid-March.

The collision of a weaker outlook in the UK with the resilience the US economy is showing is weighing heavily on sterling, amid expectations the Federal Reserve will hike interest rates again, while the Bank of England has pressed pause and the path is more uncertain.

Government bond prices also fell yesterday, pushing up the yield (or interest rate) on UK gilts to the highest level since the fallout from Liz Truss’s mini-budget a year ago.

The oil price is weakening this morning, which could take some pressure off inflation.

Brent crude is down 0.5% at $90.25 per barrel. Last week it hit $97.69 per barrel, but has slid back as the dollar has strengthened, and concerns over the global economic outlook have risen.

More good news on inflation: Greggs is not planning to raise prices before Christmas.

Greggs CEO Roisin Currie told Reuters this morning that:

“We don’t have any plans currently to take any further price rises pre-Christmas.”

Greggs has not raised its prices since June, when some products went up by 5p to 10p each, Reuters adds.

Shares in fast fashion retailer Boohoo have hit an eight-year low, after it warned that revenues this financial year could fall much more than forecast.

Boohoo told shareholders that the recovery in its sales volumes has been slower than expected. It now believes revenues this financial year will fall by between 12% and 17%. In May it had predicted a fall of up to 5%.

Boohoo has been hit by falling sales as customers returned to the high street after the pandemic, and by falling demand for leisurewear as workers headed back to the office.

Boohoo says it has cut its average selling prices, year-on-year, while the wider UK clothing market saw price inflation of 8%.

But revenues in the UK are down 19%, reflecting “the impact of the macro environment on consumer demand”, as well as price cuts.

Shares dropped around 10% in early trading to the lowest since August 2015.

Greggs results: What the analysts say

Greggs said it has enjoyed strong trading and inflation is beginning to ease, says Victoria Scholar, head of investment at interactive investor:

The bakery’s offering of drinks and snacks with speedy service have been enjoying strong sales from workers and other people on the go. Despite the cost-of-living crisis with consumers forced to make cutbacks, demand at Greggs remains robust thanks to its competitive pricing and appealing range of hot and cold items like sandwiches, sausage rolls, coffees, and sweet treats.

Even faced with pressures from inflation, Greggs is still expanding with between 135 and 145 net shop openings this year and it is also investing in its supply chain.

Shares in Greggs are up over 40% over the past year. But they have been giving back some gains since the May highs. Nonetheless the analysts remain bullish on the stock with 8 buy recommendations versus 3 holds and zero sells.”

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, says Greggs’ performance so far this year is impressive, and it should return to profit growth in 2024 as cost pressures ease:

“This is another solid performance from Greggs in a challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties.

Greggs has continued to gain market share in a difficult environment which is mightily impressive. There is no doubt Greggs’ brand is resonating strongly with the UK consumer and is in fine fettle.

The cost of raw materials, energy and wages have risen rapidly over the last year, but encouragingly these cost pressures are now beginning to ease. This isn’t just good news for profit margins but should also help underpin consumer demand by reducing the need for price increases.

Matt Britzman, equity analyst at Hargreaves Lansdown says the baker chain “continues to delight”.

Greggs is starting to build quite the reputation for delivering strong results, and today’s update certainly hasn’t bucked that trend. Once heralded for its sausage rolls, Greggs has worked hard to expand the menu whilst retaining its core value offering. All the while, the expanding delivery service (like the new partnership with Uber Eats), click & collect options, and later opening times make it easier than ever to get your bakery fix.

Inflated costs are starting to ease, which gives more wiggle room on pricing over the second half. Don’t be surprised to see a slight cooling effect on like-for-like sales from here, as it laps periods last year when prices moved higher. It’s a win in the long run though, less pressure on costs makes it easier to keep prices in check and retain that coveted value offering.

Bears will argue the valuation doesn’t leave a whole lot of room for error, and they’d be right. But with great food comes with even greater expectations and Gregg’s broadening shoulders look strong enough to carry that weight.”

Greggs customers will be keen to know that its autumn menu is now available.

It includes a hot spicy chicken and veg bhaji baguette, while new vegetarian options include a cheese and honey mustard toastie, veg bhaji flatbread and mozzarella and cheddar bites.

on the drinks side, there’s a new hazelnut mocha and hazelnut hot chocolate, while the pumpkin spice latte is back on the menu too.

Greggs lates quarterly results also shows that it continued to expand across the UK.

It opened 144 new stores so far this year, and closed 62, leading to a net increase of 82 stores.

It expects between 135 and 145 net shop openings in 2023 and around 40 relocations.

Greggs: Some easing in cost inflation in latest results

The Greggs bakery shop at Lymm M6 motorway services in Cheshire, England
The Greggs bakery shop at Lymm M6 motorway services in Cheshire, England Photograph: Justin Kase zninez/Alamy

British baker and fast food chain Greggs has confirmed that cost pressures are easing.

In its latest quarterly results, just released to the City, Greggs says there has been “some easing in cost inflation” in the last three months.

The company explains that it is now around a year since the “significant commodity-led increases” of 2022 for energy and food ingredients, which means annual inflation rates are now slowing.

It adds:

At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share.

We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions.

Greggs reported that like-for-like sales in company-managed shops have risen by 14.2% in the 13 weeks to 30 September.

It is sticking with its guidance for the financial year, despite “the uncertainty in the economy as a whole”.

Updated

Introduction: UK food price inflation driven down by grocers' price war

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Food prices in the UK are finally falling, new data this morning shows, thanks to a supermarket price war and easing inflationary pressures.

The British Retail Consortium reports that UK food prices fell by 0.1% during September. That’s the first monthly drop in the cost of food in the shops in over two years.

It brought the annual rate of food price inflation down to 9.9% in September, down from 11.5% in August, and the lowest since August 2022.

Helen Dickinson, OBE, chief executive of the British Retail Consortium, said ”fierce competition between retailers” pulled year-on-year food inflation down to single digits.

Customers who bought dairy, margarine, fish and vegetables – all typically own-brand lines – will have found lower prices compared to last month. Households also benefitted from price cuts for school uniforms and other back-to-school essentials.

Several UK supermarkets have announced rafts of price cuts in recent months, with Tesco squeezing suppliers so it can pass savings on.

UK retail sales

More widely, the BRC says prices in British store chains rose at the slowest pace in a year in September, with annual shop price inflation cooling to 6.2% last month from 6.9% in August, its lowest since September 2022.

Annual non-food inflation dropped to 4.4% in September, its lowest since December 2022, and down from August’s 4.7%.

Dickinson predicts shop price inflation to continue to fall over the rest of the year, however there are still many risks to this trend.

They include high interest rates, climbing oil prices, global shortages of sugar, and supply chain disruption from the war in Ukraine.

Food prices have been a key factor pushing up the official UK inflation rate in the last 18 months or so, so the BRC’s figures could indicate the cost of living squeeze is easing.

That will cheer the government, with reports last weekend that Rishi Sunak might call a general election once CPI inflation has dropped below 3%. It was 6.7% in August, having peaked around 11% last year.

Also coming up today

The highly anticipated criminal trial of Sam Bankman-Fried, former CEO of bankrupt crypto exchange FTX, begins today; he faces seven counts of fraud and conspiracy.

The agenda

  • 8am BST: Spanish unemployment for September

  • 2pm BST: Sam Bankman-Fried’s trial begins in New York

  • 3pm BST: JOLTS US job openings data

  • 3pm BST: IBD/TIPP index of US economic optimism.

Updated

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
What happened to 7 Up? How 'The Uncola' faded into obscurity
Sprite has dominated the lemon-lime soft drink market in recent years — here’s what 7 Up, the “Uncola” maker, is doing to try to win back customers.
The Street
The Street
Decaf coffee might be banned in the U.S. (here's why)
The popular drink has been a morning and lunchtime staple for decades.
The Street
The Street
Scientists welcome new rules on marijuana, but research will still face obstacles
When marijuana becomes a Schedule III instead of a Schedule I substance under federal rules, researchers will face fewer barriers to studying it. But there will still be some roadblocks for science.
WEKU
WEKU
These 4 Netflix Is a Joke specials are available to watch at home
From John Mulaney to Kevin Hart, you can watch these Netflix Is a Joke specials even if you're not in Los Angeles.
WhatToWatch
WhatToWatch
Jennifer Lopez Re-Wears Her Favorite Cropped Sweatsuit in an Ab-Baring Selfie
She just re-wore her favorite set.
Marie Claire
Marie Claire
X-Men '97 isn't technically canon but it could crossover with the MCU in the future, teases showrunner
"I think it's very much dealer's choice on some levels"
Total Film
Total Film
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.
Download on the AppStore Get it on Google Play