GBP: Economic optimism fails to boost pound
EUR: Economists suggest L-shape recovery
USD: Covid cases continue to increase
Sterling’s moves were rather muted yesterday despite positive preliminary PMI’s from the UK as well as the announcement of easing of the UK’s lockdown rules.
UK factories returned to growth in June with the flash PMI figure showing a print of 50.1; crucially above the 50 stagnation mark. UK service figures came in higher than expected but remains below that 50 mark showing activity continues to shrink.
June’s PMI data adds to signs that the economy looks likely to return to growth in the third quarter.Chris Williamson from data agency Markit
Easing of lockdown measures added to the optimism of economic prospects with PM Boris Johnson announcing that pubs, restaurants, hotels and hairdressers all can reopen from the 4th July in England. Theatres, cinemas, libraries, museums, theme parks, outdoor gyms and zoos are also among other businesses that can also reopen.
No data out today from the UK.
Manufacturing and services PMI’s across Europe also came in better than expected with figures from France showing that both sectors expanded in the country. However, economists warn that the upturn does not suggest a V-shape recovery.
German IFO figures are due out at 9am this morning
Stateside PMI’s came in better than expected but still showed that services and manufacturing were still shrinking – albeit at a slower pace. Chris Williamson at Markit commented that whilst the figures are encouraging, the recovery will take a long time.
The number of cases of Covid-19 still continue to grow state by state with the states or Arizona, South Carolina, Arkansas, Florida and Utah being the worst hit states.
A combination of optimism on an economic recovery following the deluge of encouraging PMI’s across the globe and the number of cases of Covid increasing in the US, the dollar dropped for the second consecutive day – causing GBP/USD and EUR/USD to be back at a one week high.
Fed’s Evans and Bullard speeches are the only notable events on the US calendar.
Have a great day, and please do take care.