Sterling in the green today

Hi everyone,

Sterling has clawed back 0.5% against the majors today, amid reports MP's have options to still be able to block a 'no-deal' Brexit. Supposedly, MP's are drawing up plans to request a further Brexit extension from the EU. From there, MP's would look to bring down the Government in a no-confidence vote, before introducing new legislation stating the Government must ask for a Brexit extension which would then be followed by a general election. The report is significant and is the sole reason for the Pounds jump. 

We have been reporting all year that a recession is coming and on Friday saw a massive step into the direction for the UK. The economy shrank 0.2% in Q2 which was worse than the expected 0%. If the economy shrinks again in Q3, we would officially be in a recession. The chances are hard to predict with consumer spending, wage growth and employment figures propping up the rest of the failing areas. GDP growth stands at 1.2% lower than the 1.4% forecast and business investment, industrial & manufacturing production have all contracted. I would say just now there is a 30% chance. 

Last Friday saw some worrying signs that parity could well be realised for £-€ rates near-term. 1.0640 was recorded as the low of the day, which is incredibly a 10-year low. £-$ currently stands at an outrageous 34-year low. There is likely to be more records broken before a turnaround, but it's obvious just how far undervalued the £ is.

It's a busy week data-wise with the UK offering key figures daily. 




Upcoming Data


Tuesday, 13th August, 2019

06:00 EU - German CPI
08:30 UK - Unemployment rate, jobless claims & average earnings
09:00 EU - German & Euro-Zone survey expectations 
12:30 US - CPI & average earnings

15:00 US - Q2 debt & credit report

Wednesday, 14th August, 2019

06:00 EU - German GDP
08:30 UK - CPI, RPI, PPI & house price index
09:00 EU - Euro-Zone GDP, industrial production & employment 

11:00 US - Mortgage applications
12:30 US - Imp/Exp price index

Thursday, 15th August, 2019

08:30 UK - Retail sales
12:30 US - Retail sales & initial jobless claim
14:00 US - Business inventories

Friday, 16th August, 2019

09:00 EU - Euro-Zone trade balance
12:30 US - Housing starts & building permits


Dan Waterman
Office Manager

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