Whilst the UK continues to bask in the good news from winning the cricket world cup, there is less cheer on financial markets for the pound. Yesterday, a report by the Resolution Foundation think-tank, highlighted the UK being at the biggest risk of recession since 2007, adding to the general negative mood surrounding the British currency.
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Whilst GDP data for May showed a 0.3% rise when released last week, other indicators have raised concern, including Brexit uncertainty and slowing global growth which could negatively affect the UK. The report highlighted how often recessions are the result of global events and the UK is in a precarious position to withstand such risks.
Today, we have the latest UK Unemployment data to take centre stage which may provide the latest direction for sterling at 09.30 am. The data itself is not expected to show a change in the 3.8% current rate of Unemployment, its lowest since 1974. However, sterling may be sensitive around this important release, which has been one of the good news stories for sterling given the 45-year low record.
Also, today, we will have a speech by Bank of England Governor Mark Carney, who may shed some further light on his views for the future. Sterling might react to any comments relating to Brexit, interest rates or how the UK’s central bank view the future.
Sterling has suffered in recent weeks as uncertainties over Brexit persist with the ongoing Conservative leadership campaign, and the concerns over the direction of UK economic data. Clients with a sterling requirement might benefit from a review with our team to discuss the latest news and upcoming events.
Tomorrow, it is the latest Inflation data, another key factor for the Bank of England in deciding whether to cut interest rates. According to reports in the FT yesterday, the Bank of England might be looking to cut interest rates this year or next. The raising and lowering of interest rates can affect the strength and weakness of a currency, so this is a topic to monitor up ahead for the pound.
Thursday is Retail Sales, and then Friday Public Sector Net Borrowing. Looking further ahead the market is now eagerly awaiting the next direction on Brexit with the outcome from the UK’s leadership campaign due on the 22nd July.
The new PM will not have too much time in the spotlight with parliamentary recess from the 25th July to 3rd September. The increased chance of no-deal has seen sterling lower and with both Jeremy Hunt and Boris backing this option, the pound has been weaker.
The lack of any clear direction after the new PM is instilled is leaving sterling treading water with no major direction being established. Following the losses of the last few weeks.
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