A glimpse of light

Today’s news headlines:

‘UK economy grows 6.6% in July as coronavirus restrictions eased’. The UK economy expanded 6.6% in July, only marginally off the market consensus forecast, marking a second consecutive month of rebound. Breaking that down further, the service sector expanded 6.1%, but manufacturing slowed from June’s admittedly stellar 11% to 6.3%. Still, this figure suggests that about half of the coronavirus loss in growth has been regained. However, concerns linger over expiring employment benefits and what the upcoming fiscal pain will mean for the UK economy heading into 2021. (Financial Times)

UK poised to strike trade deal with Japan’. In a welcome sign of progress, the UK is close to a trade deal with Japan, most notably making advancement on agricultural exports. UK Trade Minister Liz Truss is expected to finalise negotiations today, on a broader set of items such as financial services and data. Before we congratulate the government on its win, it's worth reminding ourselves that Japanese trade makes up less than 2% of the UK’s total trade flows based on 2019 figures. (Financial Times)

Today's events, rates, and data 

  • The Pound sell-off gained speed yesterday, pushing towards June lows. The Dollar, on the other hand, seemed to regain its balance, trading sideways most of the session. Following the European Central Bank press conference—in which Christine Lagarde voiced a marginally more hawkish message—the common currency rallied to test highs, ultimately settling back into range trading. The week closes absent of notable data points, leaving most minds on geopolitical factors like the US-China tensions and the fiasco that is the UK-EU negotiations.

Today's events

JP  BSI Manufacturing Index: 0.1 vs -52.3 last quarter
EU  German WPI m/m: -0.45 vs 0.5% last month
UK  Construction Output m/m: 17.6% vs 23.5% last month
UK  Industrial Production m/m: 5.2% vs 9.3% last month
UK  Manufacturing Production m/m: 6.3% vs 11.0% last month
UK  NIESR GDP estimate: 1:00pm 

Interbank rates:

GBP/USD – 1.2825
GBP/EUR – 1.0840
EUR/USD – 1.1840
USD/CAD – 1.3165