Newsletter – 19th July 2019

Morning Bulletin

Yesterday

  • UK Retail Sales rebounded in some fashion in June, having slumped -0.6% in May, Retail Sales jumped 1% during June giving the UK economy a much needed boost. Many economists have been expecting to see the UK economy suffer a slight contraction in the second quarter of 2019, however this punchy Retail Sales number could potentially prevent such a decline.
  • According to a report produced by the UK Government’s budget watchdog a no-deal Brexit will plunge the UK into a recession, with the economy contracting by 2% in real terms by the end of 2020. The Office for Budget Responsibility also said a no-deal exit would hit the public finances to the tune of £30Bn a year from 2020.
  • The House of Commons voted overwhelmingly to block any bid to shutdown Parliament yesterday afternoon and with it seemingly decreased the potential for a no-deal Brexit. MP’s voted 315 to 274 in favour of the amendment in a bid to prevent the assumed next PM Boris Johnson from shutting down Parliament in order to force through a no-deal Brexit. Although this doesn’t mean it’s impossible for Parliament to be shutdown, MP’s have sent a clear message to the PM in waiting.
  • US Philly Fed Manufacturing Index 21.8 (5.0 Exp)
  • US Unemployment Claims 216K as expected
Overnight

  • The US Dollar was sold off aggressively in FX markets late yesterday evening following comments from two influential US Fed members about a potentially aggressive path for rate cuts. Fed Member John Williams was one of the two in question, however the New York Federal Reserve have since issued a statement saying Williams was merely drawing from academic research when making his speech and was not directly talking about potential policy actions.
  • Incoming EU Commission President Ursula von der Leyen once again reiterated her stance on Brexit when being interviewed by a number of European papers. Mrs von der Leyen said she would consider granting the UK a further extension if there were good grounds for it, adding it was important that an orderly departure be secured in order to get future relations off on a good footing.
  • According to the latest reuters poll of leading economists the chances of a no-deal Brexit have risen to 30% in July. That is up from 25% last month, and just 15% in May. The main factor is the increasing likelihood of Boris Johnson becoming the UK’s new PM next week.
  • Japan National Core CPI y/y 0.6% as expected
  • Japan All Industries Activity m/m 0.3% as expected
  • German PPI m/m -0.4% (-0.1% Exp)
Today
  • Economic data is thin on the ground today, but there are still a few key releases.
  • UK Borrowing figures will be in focus this morning, with Canadian Retail Sales and US Consumer Confidence headlining this afternoon.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1122 -0.01
GBP/USD 1.2522 -0.17
EUR/USD 1.1258 -0.17
AUD/USD 0.7063 -0.18

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Public Sector Net Borrowing 3.4Bn 4.5Bn
13.30 USD Core Retail Sales m/m 0.3% 0.1%
13.30 USD Retail Sales m/m 0.3% 0.1%
15.00 USD Prelim UoM Consumer Sentiment 98.6 98.2
16.05 USD Fed Member Bullard Speaks