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Concerns over a second wave in the US

GBP - British Pound

The UK economy had an awful end to last week, after monthly GDP figures suggested a 20% contraction in the UK economy. The shocking figure obviously is largely down to the global lockdown; however, it is important to remember that there is long term structural damage being done here. The pound was one of the worst performing majors last week and with Brexit on the horizon, it’s looking like it may be a tough month or two for the British currency. The BoE are currently the most likely to ease further as rumours circulate that the UK will face negative interest rates for the first time.

This week we see an abundance of UK data out, especially on Tuesday and Thursday, with the MPC rate decision at 12pm on Thursday.

Key Movers

The Euro had a fairly strong week coupled with better than expected Manufacturing Production data and a successful ease on travel. The Eurozone decided to ease restrictions on travel from abroad and successfully executed without an uptick in cases. Without any Brexit leaks, chances are the Euro will remain fairly muted this week, with little to no worthwhile technical data releases.

The US is starting to see an improvement in their data, however how long is this expected to last? There is real concern for many around a ‘second wave’ in the US, due to the mass gatherings nationwide in response to George Floyd. Texas has it’s highest number of reported cases recently with 2500 and Arizona’s cases have increased by 50% between May 26th and June 9th. Expect to see a second decline in employment and output figures released from the US, as the dollar slips on the back of the news. There are a number of US data releases this week, however the key figure will be monthly retail sales on Tuesday.

Expected Ranges

GBP/USD: 1.2485-1.2665 ▼

GBP/EUR: 1.1075-1.1240 ▼

GBP/AUD: 1.8300-1.8490 ▼

GBP/CAD: 1.6980-1.7175 ▼