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Is a post-Covid UK awakening?

Is a post-Covid UK awakening?

GBP The CBI industrial orders index recovered in July from, but fell short of the forecasts. In the previous 3 months overall orders had declined at the fastest pace since October 1980, but companies expect order flows to improve over the next three months and the decline in export orders has slowed. Bank of England external member Jonathan Haskel stated that he was concerned about the economic recovery getting stuck with a further risk of undershooting the inflation target, with unemployment trends key he also warned that re-opening too quickly won’t help the economy.

As the latest round of EU/UK trade negotiations concluded, EU Chief Negotiator Barnier repeated his criticism that the UK government was unwilling to engage on key issues with no progress on key issues such as fishing and state aid, although there had been some progress in other areas. Barnier added that the UK stance made a trade agreement at this point unlikely, but a deal was still possible and talks will continue. The Pound reaction was muted given low expectations of an imminent breakthrough, holding above 1.2700 on the Dollar and 1.0976  on the Euro despite the dip in risk appetite. 

UK retail sales bounced back this morning with 13.9%, well ahead of the  8% forecasted but the Pound has seen little benefit. Manufacturing PMI figures are due at 9.30 and expected to increase slightly. A figure below 50, (indicating a contraction) would be disastrous for the Pound.



US initial jobless claims increased to 1.42mn in the latest week from 1.31mn the previous month and above consensus forecasts of 1.30mn. Continuing claims, however, declined to 16.2mn from 17.3mn previously. When including Federal assistance, the latest data for the week ending July 4th recorded a decline in the total number of people receiving benefits to 31.8mn from 32.0mn the previous week. 

Fiscal policy was also a significant focus with further Republican bickering within the Senate over the next stimulus plan and little chance that legislation will be in place before the end of July when some unemployment benefits are due to expire.

The latest PMI business confidence data will be released on Friday which will be important for the sentiment. Overall risk appetite was weaker in New York, but the dollar struggled to gain significant support despite the decline inequities. The US currency gained slight protection from the weaker risk tone with the Euro around 1.1600 on Friday.



The Euro was unable to take further headway during the US session yesterday with pressure for a correction after recent gains. With an element of support helping the Greenback, the single currency dipped to just below 1.1550 before rising again to the highs of 1.1625.

Euro-zone consumer confidence edged lower to -15.0 for July from -14.7 previously and below consensus forecasts of -12.0 which will create some uncertainty over the outlook for consumer spending. The latest PMI business confidence data is due for release later today which will be important for the overall sentiment of the currency. As of writing, the Euro trades around the 1.1610 level against its US counterpart.


Data to watch

06:00 – GBP – Retail Sales 

07:15 – EUR – French Flash Services PMI

07:15 – EUR – French Flash Manufacturing PMI

07:30 – EUR – German Flash Manufacturing PMI

07:30 – EUR – German Flash Services PMI

08:30 – GBP – Flash Manufacturing PMI

08:30 – GBP – Flash Services PMI

13:45 – USD – Flash Manufacturing PMI


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