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Bank of England struggles to give money away as we amble toward a recession

Bank of England struggles to give money away as we amble toward a recession

Sterling remained under pressure throughout the day yesterday, reaching four-week lows against the Dollar. UK Manufacturing production data was weaker than expected with a 0.3% decline for June following a revised 0.6% drop for May, whilst Industrial Output growth printed at 0.1%. The Bank of England’s failure to buy enough government bonds yesterday raises big questions about its post-Brexit economic stimulus plans, according to analysts.

With poor sentiment already dogging the Pound, National Institute of Economic and Social Research (NIESR) reported that the chance of a “technical” UK recession has increased. Although their report recorded 0.3% GDP growth in the three months to July, there was a 0.2% contraction for the month of July in isolation, highlighting the negative impact of the EU referendum. Sterling found support below 1.3000 against the Dollar and wider US losses in the Asian trading session allowed a recovery back above 1.3050 for the European open this morning.

There was a mixed bag of results for the States yesterday as data showed that US wholesale inventories increased by 0.3% for June and productivity failed to meet expectations for a third successive quarterly decline. The Dollar weakened overnight through dampened expectations of higher US interest rates.

US JOLTS Job Openings data will be released at 3:00pm, however following recent data from the US this will likely have muted impact on the overall market.

German Import figures printed at 1%, 0.4% better than expected. The Euro strengthened further versus Sterling as another strong European trading session saw the single currency end the day at around the 1.1701 levels. This is the strongest the Euro has been against Sterling since October 2013.

Data to watch: 7pm US July Monthly budget statement. 11.59pm UK RICS July housing price balance.

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