Growing concerns over the virus pandemic have spooked the markets this week, with the US seeing a record rise in cases in some states, and Australia seeing its biggest spike since April. Fears of a potential second wave in the UK as the lockdown continues to be relaxed, are adding to the risk-off sentiment.
Global equities sold off aggressively as investors opted for safety, whilst UK 5-year government bonds hit a record low -0.04%.
The US threat of new trade tariffs on UK and European goods has added to the negative outlook, with the IMF this week downgrading its global economic forecasts.
UK data this week, including the critical services sector, was actually better than expected, recovering strongly from the initial impact of the virus in April. However, huge uncertainty remains, particularly for the jobs market, and what happens once the furlough schemes begin to be withdrawn.
On the exchanges, sterling remains range-bound with a low conviction rate.
GBP/USD dropped to a recent low of 1.2340 earlier this week before recovering towards 1.2500. There is growing selling interest above the 1.2500 level and ahead of the significant 1.2750, whilst 1.2250 is the next downside target.
GBP/EUR remains above the psychological 1.1000 level, but below the 1.1250 area, which continues to contain the topside.
|30/6/20||UK GDP QoQ||-2.0%||-2.0%|
|30/6/20||UK GDP YoY||-1.6%||-1.6%|
|1/7/20||UK Markit Manufacturing PMI SA||50.1||50.2|
|1/7/20||US FOMC Minutes||–||–|
|2/7/20||US Nonfarm Payrolls||2509k||3000k|
|3/7/20||UK Markit/CIPS Services PMI||47.0||47.1|
|3/7/20||UK Markit/CIPS Composite PMI||47.6||47.7|
*Bloomberg survey / Not available
|Indices||Previous Close||YTD % Change|
|DFM GENERAL INDEX||2086||-24.53%|
UK Benchmark Rates
|3 month||0.13700%||2 year||0.24%|
|6 month||0.29825%||3 year||0.25%|
|12 month||0.47100%||5 year||0.29%|
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