GBP weak & under pressure in last 24 hours but eased slightly after UK data this morning.

Hi everyone,

Overnight the Reserve Bank of New Zealand left interest rates on hold at 0.25% but increased its Large Scale Asset Purchase programme and indicated that negative rates “will become an option in the future”. Here in the UK, Chancellor Sunak extended the government’s staff furlough programme to the end of October, with employers starting to bear some of the cost of the scheme

All Sterling exchange rates have moved a little higher this morning, but for now has not really clawed back the loses we saw yesterday. This morning’s data was better-than-expected for the most part but just be reminded that April and Q2 conditions are going to be much worse considering that the UK only went into lockdown on 23rd of March. Not to mention that conditions at the start of Q1 also got a boost from post-election euphoria, which has long faded away and will not see a recurrence this quarter. That coupled with Brexit negotiations risks, will deter business investments even more alongside an uncertain recovery path in the coming months. In short, yes, the data was 'not as bad as expected' but it doesn't give much to be optimistic about when you factor in all the other circumstances at play

In the Eurozone, analysts predict March industrial production to drop by 11.2% on the month (consensus:  12.5%) following particularly large declines in Italy (-28.4%) and France ( 16.4%). ECB Chief Economist Philip Lane will speak at two events today at 12pm and 5pm. Lane yesterday defended the ECB’s QE programme after the German Constitutional Court last week questioned whether its asset purchases were proportionate

The key focus later today will be on US Fed Chairman Jay Powell’s scheduled discussion on current economic issues at 2pm (UK time). In light of the unprecedented fall of 20.5 million jobs in just the single month of April, his comments on the policy outlook will be closely analysed. There has been some debate recently on whether US interest rates could be cut below zero. A number of Fed officials, however, have pushed back against the idea, although President Trump said the US should accept the “gift” of negative rates.


Upcoming Data


Wednesday, 13th May, 2020
10:00  EUR  Industrial Production (Mar)
13:30  USD  Producer Price Index ex Food & Energy (Apr)

Thursday,14th May, 2020
06:30  EUR  France ILO Unemployment (Q1) 
07:00  EUR  Harmonized Index of Consumer Prices (Apr)
09:00  EUR  Economic Bulletin - (REPORT)  
13:30  USD  Initial Jobless Claims (May 8) 

Friday, 15th May, 2020
07:00  EUR  German Gross Domestic Product (Q1) PREL
10:00  EUR  Employment Change (Q1) PREL
10:00  EUR  EZ Gross Domestic Product (Q1) PREL
10:00  EUR  Employment Change (QoQ)(Q1) PREL
13:30  USD  Retail Sales Control Group(Apr)
14:15  USD  Industrial Production (MoM)(Apr)
15:00  USD  Michigan Consumer Sentiment (May) 


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