Pound rises as Trump warns dollar is too strong - as it happened

The pound rose above $1.25 on Thursday after President Trump said the dollar was 'getting too strong'

• IMF's Lagarde: Trump's trade barriers would be 'self-inflicted wound'
• 'Great chemistry': Trump abandons China criticism

2.50pm BST

US markets are down in early trading as Trump's comments continue to reverberate around Wall Street.

Here's how it looked at the opening bell:

2.28pm BST

European markets are still in the red this afternoon:

1.30pm BST

Over in Greece, prime minister Alexis Tsipras has used his last cabinet meeting before Easter to call for a "big political counter attack" from ministers who will soon be called to defend concessions made by his leftist-led government with creditors keeping the debt-stricken country afloat.

1.10pm BST

The squeeze on real incomes in the UK shouldn't be too severe according to analysts at Capital Economics.

It follows official figures on Wednesday which showed inflation outpaced regular pay growth (excluding bonuses) for the first time in two-and-a-half years in February.

After two-and-a-half years of rising real wages, this week's inflation and labour market figures confirmed that the pay squeeze has returned. And, with inflation rising faster than expected, some further drop in real earnings looks likely over the coming months.

However, the squeeze shouldn't be as sharp or prolonged as that seen after the financial crisis, and there are other reasons to think that spending growth might hold up rather better this time around.

Related: Living standards in UK fall for the first time since 2014

12.36pm BST

Brent crude is up 0.2% at $55.97 a barrel after the International Energy Agency said global demand for oil is close to outstripping supply after nearly three years of surplus production.

Oil stocks across the Organisation for Economic Cooperation and Development fell by 17.2m barrels in March, the IEA said.

12.21pm BST

Paresh Davdra, chief executive and co-founder of RationalFX, says the pound is increasingly at the mercy of developments in other markets:

Whilst the pound was once driven by political sentiment over Brexit before Article 50, it now seems more overtly driven by the fortunes of its major peers, achieving strong runs on the back of weakness in the dollar and the euro.

This could make for volatile or inconsistent movement for the currency should the dollar or euro prove vulnerable to political drivers which, thus far, appears highly likely.

12.11pm BST

The pound is just about holding on to gains against the dollar - currently at $1.2540 - in what has been a decent week for sterling:

11.37am BST

Howard Archer, chief UK economist at IHS Markit, says the Bank of England will be pleased by signs that lenders are making it tougher for consumers to borrow.

If the fundamentals for consumers do weaken further as expected over the coming months, it is vital that banks adopt tight lending standards in granting unsecured consumer credit, or it risks causing serious debt problems for the economy.

The Bank of England has clearly become more worried about consumer borrowing and debt levels in recent months. This was highlighted by the households savings ratio falling to a record low of 3.3% in the fourth quarter of 2016.

11.25am BST

More British lenders plan to tighten the supply of credit to consumers than at any time since the 2008/09 financial crisis.

That's according to the latest quarterly credit conditions survey from the Bank of England, which found that a net balance of 18.8% of lenders expect to rein in supply over the next three months, up from 7.9% in the previous survey.

10.48am BST

Unite, the UK's largest union, says it is concerned by Royal Mail's pension closure and will be studying the implications.

Brian Scott, Unite officer for the Royal Mail:

This is a cause for serious concern for a hardworking and dedicated workforce.

We will study the implications of today's announcement very carefully and consider all the options going forward. If we don't achieve a satisfactory outcome, we can't rule out an industrial action ballot on this issue.

10.40am BST

Royal Mail making big profits so understandable industrial action over pension scheme closure @CWUnews @DaveWardGS https://t.co/iygVpyn9HL

10.31am BST

Royal Mail has responded to the threat of strike action by the Communication Workers Union, which has condemned the company's decision to close its defined benefit pension scheme.

A spokesperson for Royal Mail said:

Customers choose Royal Mail because they trust us to deliver. Any industrial action - or threat of it - undermines this trust between Royal Mail and our customers, and we could lose business as a result.

Under our proposal, only a very small percentage would see this level of reduction in their pension. If members leave Royal Mail employment before that age, the impact on their benefits would be smaller.

The plan has around 90,000 members. The impact of the proposed changes will vary from member to member. For plan members close to retirement, we expect the changes to have a smaller effect. The impact of the proposed changes will depend on age, length of service and which part of the scheme a member is in.

9.46am BST

Investors appear to have welcomed the news that Royal Mail plans to close its defined benefit pensions scheme.

Shares are up 0.8% at 422.5p, making it one of the FTSE's top risers. (The FTSE is down 0.5% at 7,311.). Shares in Royal Mail were up almost 2% earlier.

Shares in Royal Mail were up 1.9% this morning after the group finally announced it will be shutting its existing pension plan. Despite the scheme currently running a surplus, an impending review of company contributions has been hanging over the group for some time.

Royal Mail's current contributions to this scheme alone are about 10% of total salary costs, including wages of staff who are not members of the scheme. These were expected to more than double to over 1bn in 2018, equivalent to around 25% of the group's entire 2015/16 UK wage bill.

9.37am BST

The Communication Workers Union is threatening strike action over Royal Mail's decision to close its defined benefit pension scheme in 2018.

The union said it "strongly condemns" the move, which it says would cost the average worker a third of their future pension.

Although Royal Mail's own consultation exercise revealed massive opposition to its closure plan, the company has decided to ignore the views of its workforce and proceed with closure without consent.

CWU has made clear that any attempt by the company to impose change without agreement will be met with the strongest possible opposition including a ballot for industrial action.

9.11am BST

Corporate news is a little thin on the ground this morning but Royal Mail has confirmed the closure of its defined benefit pension scheme.

We have concluded that there is no affordable solution to keeping the plan open in its current form. Therefore, the company has come to the decision that the plan will close to future accrual on 31 March 2018, subject to trustee approval.

We know how important pension benefits are to our colleagues. We continue to work closely with our unions on a sustainable and affordable solution for the provision of future pension benefits.

Related: Big cuts in store for Royal Mail and Post Office workers' pensions

8.53am BST

Major European markets have followed Wall Street and Asia lower this morning.

The scores so far:

The pound obviously relished Trump's comments, climbing another half a percent in what has already been a very strong week for the currency.

This in turn dragged the FTSE lower, the UK index dropping 45 points with the majority of its commodity and banking stocks also in the red.

8.44am BST

Elsa Lignos, global head of currency strategy for RBC Capital Markets, says the reaction in the FX markets to Trump's comments could well be short-lived.

Typically, politicians' currency comments have no lasting effect-the kneejerk reaction may be 50-100pts but it quickly fades. The comments would have more lasting power if they drive Trump to openly look for a dove to replace Yellen, though her term is not up until October 2018.

8.32am BST

Trump softened his tone on China during the interview with the Wall Street Journal.

Having previously branded Beijing the "grand champion" of currency manipulation, the President said he'd changed his mind:

They're not currency manipulators.

I like her, I respect her. It's very early.

8.17am BST

Kathy Lien, managing director of currency strategy at BK Asset Management in New York said the dollar sell-off following Trump's comments was probably an overreaction:

The market had a big reaction, but I think it was an overreaction. He may just be hedging his bets by making sure that the American public realises he's not backing down on trade.

8.03am BST

The pound is up against both the dollar and the euro this morning.

Sterling is up 0.1% against the dollar at $1.2548, and 0.2% against the euro at a1.1778.

7.59am BST

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

The pound is back above $1.25 following a warning from President Trump that the dollar "is getting too strong" because people have confidence in him.

I think our dollar is getting too strong, and partially that's my fault because people have confidence in me. But that's hurting -- that will hurt ultimately.

Look, there's some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good. It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.

I do like a low-interest rate policy, I must be honest with you.