#345 GBP steady, Amazon France Tax & “Amazon Choice” under Fire (Amazon Newsday)
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GBP Latest: Strong Wage & Employment Data Provides Support, but Expect Any Strength to be Limited
The latest UK labour market data has beaten expectations, and should provide Sterling with some short-term support but we remain of the view any strength in the currency should ultimately remain limited in nature.
According to the ONS
, Average Earnings – excluding bonuses – read at 3.9% in June, ahead of economist forecasts for a reading of 3.8% and the previous month’s reading of 3.6%.
This is an 11-year high.
The Average Earnings Index – with bonuses included – for June read at 3.7%, in line with economist forecasts but above the previous month’s 3.5% which was itself revised higher.
And, the better-than-expected numbers extended to the employment statistics where it was shown the UK workforce grew 115K on a the three-month-on-three-month basis in June, markets had only expected growth of 65K.
“While much of that was part-time employment, it is encouraging that firms have retained their workers, suggesting they expect activity to pick up again following the Brexit hangover in Q2,” says Andrew Wishart, UK Economist with Capital Economics.
The UK unemployment rate nudged up unexpectedly to 3.9% in (the three months) to June. Consensushad been for a steady rate of 3.8% for the fourth consecutive month.
When it comes to currency markets, deviation from expectations move a currency, and the best on expectations should therefore be supportive of Sterling.
We are seeing some gains in the Pound following the release, with the Pound-to-Euro exchange rate trading at 1.0785, the day’s low is at 1.0756. The Pound-to-Dollar exchange rate trading at 1.2067, the day’s low is at 1.2042.
The Pound Advances on Reports ‘Remainer’ MPs Have Options to Block ‘No Deal’ Brexit
– GBP/EUR @ 1.0786 +0.56% | GBP/USD @ 1.2098 +0.64%
– MPs said to be working on credible route to preventing ‘no deal’ Brexit
– Sterling seen higher in Monday trade
– But gains tipped to be short lived
– However, IfG says ability of Parliament to block ‘no deal’ effectively not possible
Pound Sterling went higher on Monday in a move that coincides with fresh reports that there are in fact still credible routes that can be explored by MPs wishing to prevent a ‘no deal’ Brexit.
Sterling has been under pressure over recent days and weeks as it became increasingly clear that Prime Minister Boris Johnson could deliver a ‘no deal’ Brexit if he truly desired such an outcome, and all indications thus far in his young premiership suggest he is intent on doing so.
From a currency perspective, it is therefore likely that any suggestions that MPs do in fact still have options to thwart the Prime Minister’s intentions would potentially prove supportive to Sterling.
“There were some developments on that over the weekend which could suggest some upside risk for the Pound,” says Fritz Louw, a Currency Analyst with MUFG.
Louw references a report
in the Times
that says “MPs are drawing up plans to compel Boris Johnson to break his “do or die” pledge and force him to request an 11th-hour Brexit extension from the European Union.”
According to the report, MPs would look to bring down the Government in a no-confidence vote. However, instead of forming a new administration in the 14 days stipulated by the Fixed Parliament Act, MPs will try introduce new legislation.
This legislation will state that the Government must ask for a Brexit extension before calling a mandatory General Election.
After all, if no alternative government is formed within 14 days, a General Election must be held.
This document has reportedly been discussed with Labour leadership and it has also been signed off by Dominic Grieve and circulated among 300 MPs who support a second referendum.
“It would be counterproductive to spell out the precise mechanism(s) through which this might be achieved, but we must be clear about the principle — a general election must not be used as a device to get a no deal or any other form of Brexit over the line without the public having their say,” the document says.
The report is significant in that it is the first real sign that there remain options to prevent a ‘no deal’.
Markets have of late steadily been ramping up expectations for a ‘no deal’, and this is most clearly expressed through the selling of Sterling.
If the tide against ‘no deal’ were to turn, then perhaps Sterling’s fortunes would also shift to the upside.
3% Digital Services Tax in France
Following the creation of a 3% digital services tax in France, Amazon informed sellers that they will have to adjust our referral fee rates on Amazon.fr
to reflect this additional cost.
Starting October 1, 2019, the referral fee on sales that occur on Amazon.fr
will increase by 3%. For example, on an item for which the referral fee is currently 15%, sellers will pay a fee of 15.45% from October 1, 2019.
• On an item for which the total sales price is €100, and the current referral fee rate is 15%, your referral fee rate starting October 1, 2019 will be 15.45%, and the referral fee you pay will be €15.45 (calculated as 15.45% of €100).
More information about these upcoming changes, including fee schedules, definitions and examples, are available in the “Selling on Amazon Fee Schedule” on Amazon’s Seller Central platform.
Amazon quizzed over ‘Choice’ store ratings
Amazon is being told to show how it decides which products get the “Amazon’s Choice” label in its store.
Two US senators have written to Amazon demanding it to tell them if people or algorithms are making choices about what gets the label.
They are concerned that the Choice category can be manipulated by fake reviews and can mislead consumers.
Amazon said it “worked hard” to ensure reviews were accurate and real.
The online retailer has until 16 September to give a response to the letter.
The letter was written following an investigation by news site Buzzfeed which claimed many products in the “Choice” category are of poor quality or have their ratings boosted by fake reviews.
Research suggests products getting the Choice label sell better. OC&C Strategy Consultants found that products awarded the Choice label see a sales jump of about 300%.
This is partly because anyone using their Amazon Echo smart speaker to buy products in a category in which they have never shopped before, will get a product bearing the Choice label.
“We are concerned the badge is assigned in an arbitrary manner, or worse, based on fraudulent product reviews,” wrote Democrats Bob Menendez and Richard Blumenthal.
A lack of transparency about Amazon Choice means consumers were prevented from making “informed choices”, they
The senators want answers about the process behind Choice and whether the products in the category are ever checked by people to ensure they are not faulty or badly made.
Mr Menendez told Buzzfeed he wanted a “full and robust” answer to the queries in the letter. This could prompt a further call to Amazon to change the way Choice products are picked, he said.
“Or we force it to change by some federal regulatory agency or by some legislation,” he added.
In a statement, an Amazon spokesperson said: “Amazon invests significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers.”
It said it used both human investigators and automatic tools to find and remove fake reviews. It said it policed its reviews, worked with social media sites to stop fake reviews being generated and took legal action against offenders.
“We work hard to enrich the shopping experience for our customers and selling partners with authentic reviews written by real customers,” it said. “Customers can help by reporting any requests they get to manipulate reviews to customer service.”