- Bank of England Governor releases negative Brexit report
- Relationship between Trump and Kim Jong Un thaws
By Joe De Berniere
Yesterday saw three key economic events.
UK retail sales show surprise uplift
The first was the UK Retail Sales figure. This beat expectations of 0.8% with 1.6% for April as consumers resumed spending after the cold weather earlier in the year and a 4.7% surge in petrol sales. It is at the highest level since May 2017. The figure is important because it may convince markets that the UK economy might just be about to leave behind a recent soft patch, which will surely increase expectations for an interest rate rise at the Bank of England’s (BoE) next meeting in August. The Pound reacted positively and shot up 0.5% across the board, but unfortunately lost its gains later in the day. However, the Office for National Statistics (ONS) said the sector remained broadly subdued and analysts said the underlying trend was ‘lacklustre’ and offered little incentive to hike rates. Future retail sales data will be key to watch going forward and online retail sales will likely feature prominently as high street stores continue to close.
Bank of England Governor releases negative Brexit report
The second big piece of news was Bank of England Governor Mark Carney’s damning report on Brexit, saying that the vote has left households £900 worse off and that it has lowered growth by up to 2%. However, he remarked that there could be a sharp pick up in business investment when a Brexit agreement is struck and in turn Sterling should pick up.
Relationship between Trump and Kim Jong Un thaws
The third piece of news was that President Trump has cancelled the summit with Kim Jong Un based on ‘tremendous anger and open hostility’ in Kim’s recent statements. The US Dollar lost 0.5% vs EUR as a result. The Japanese Yen was in fact the main benefactor in this, as an alternative “safe haven’ currency to the USD, strengthening 0.8%.
The focus today will be UK Gross Domestic Product (GDP), US Durable Goods and Mr Carney speaking in Stockholm on the future of central banking.