UK worst quarterly GDP figure ever.
Wednesday 12 August, 2020
Daily Currency UpdateGBP - British PoundPoor start to the day for Sterling, as it found itself slipping against its peers on the back of the UK's lowest ever quarterly GDP figures. The preliminary data came in at -20.4% for Q2, following a -2.2% drop in Q1. The poor data didn’t take a genius to predict and the BoE will be looking to the way in which the UK economy bounces back, rather than dwelling on unavoidable poor data now. A large part of the British recovery depends on Brexit negotiations, which come at a rather unfortunate time, considering the current business confidence. A deal is looking more likely than it was, especially after Barnier’s recent hints, however a breakdown could lead to a real vulnerability in GBP. In addition, on the surface, we see relatively strong employment figures in the UK at present (3.9%), however Jonathon Ferro claims this is the most misleading data set in the world due to the furlough scheme. Come October, these figures are likely to skyrocket.
Key MoversTo what has been likened to the space race, it seems the global superpowers are now racing to achieve the world's first COVID-19 vaccine. UK and the US have already thrown their hat in the ring and Russia is the most recent to join them. Putin seems delighted with the drug and despite a lack of phase 3 testing (which generally takes months), he has already administered a dose to his daughter, claiming she went from having a fever to not overnight. If the drug is approved by other nations, Russia believe they can roll out 1bn doses to 20 countries ASAP.New Zealand face their first COVID-19 patients in the past 100 days, after a house of 4 were found to be infected in Auckland. Jacinda Ardern has ordered a 2-day lockdown in the city to avoid further spread.Finally, the US-China negotiations are supposedly restarting in the coming days, where WeChat and TikTok will be discussed. Trump will likely play hard ball, despite the chinks in the US economy armour.
- GBP/USD: 1.2970 - 1.3130 ▼
- GBP/EUR: 1.1030 - 1.1195 ▼
- GBP/CAD: 1.7310 - 1.7475 ▼
- GBP/AUD: 1.8260 - 1.8365 ▼