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Sterling slips again

Published: Monday 12 August 2019

  • Sterling hit by GBP correction
  • Quiet Monday ahead of busy data week
  • Markets prepare for repercussions of drop in Chinese industrial production

We hope you had a great weekend and the wind didn’t do our UK readers too much harm. Our offices were hit by the power outage that hit the south east on Friday but our very dedicated IT gurus had us all up and running ready for this morning’s business start. A huge than you to them. Apparently you can only turn it off and on again if it isn’t linked to a system. Who knew?

Today is a public holiday in Singapore, Japan and India, so overnight trading was light. We commence trading in the UK with Sterling still looking very sorry for itself after Gross Domestic Product (GDP) data on Friday showed a 0.2% contraction in Q2, bring the annual economic growth down, but still in positive territory. Q1 saw a boost from an element of stockpiling, so that worked its way into this Quarter on Quarter decline. Let’s not get too carried away. Seems the markets already did get carried away and the Pound slipped again.   

This week’s economic data

This week brings UK employment data; the evidence that the UK economy is still buoyant, we’ll get inflation data, evidence that rate movements are not required and retail sales which may prove that people are hanging on to the money they have gained from the highest wage growth in 11 years. And why are they holding onto their cash? Well it’s a word that starts with a B and rhymes with flex it.

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Fall could be in store for the Euro on German data
As Monday’s data diary is so light, let’s look at the other big events this week. The German ZEW economic sentiment index is likely to be pretty dire when it is released tomorrow and German GDP data is likely to be equally poor, a contraction is likely.
US data likely to show slowdown
We should see a slowdown in US inflation; making sense of the Federal Reserve’s rate cut at their last meeting. We expect US retail sales to also show a slowdown when that data is out on Thursday. The US Dollar is more likely to be directly influenced by US-China trade developments, though.
Chinese industrial data could move many markets

Wednesday is likely to deliver a drop in Chinese industrial production. That has repercussions for the countries that supply China and those include Australia, New Zealand, Japan and many other Asia Pacific countries. It could also negatively affect commodity producers like Canada and South Africa, though, so beware.

A sporting success

And there was a lot of sport going on at the weekend. I am going to single out Jamie Chadwick for high praise, after she become the first championship winner of the W series motor racing season. This, if you haven’t seen it, is a women only racing series where cars are all alike and shuffled at each meeting to ensure it is driver skill alone that shines through. It is a very interesting format and fantastic to see women being promoted in motorsport.

Looking to adopt

A husband and wife who own a circus go to an adoption agency looking to adopt a child, but the case manager there has some questions about their suitability as parents.
So the couple produce photos of their 50-foot motor home, which is clean and well maintained and equipped with a beautiful nursery. It opens out on both sides and the roof elevates to create a 1,000 square foot dwelling.
The case managers are satisfied by this, but then raise concerns about the kind of education a child would receive while in the couple's care.
The husband puts their mind at ease, saying, "We've arranged for a full-time tutor to travel with us and provide education in the three Rs, plus French, Mandarin, and computer skills."
After making notes, the case manager expresses concern about a child being raised in a circus environment.
This time the wife explains, "Our nanny is a certified expert in paediatric care, welfare, and diet. The circus is a very sociable environment and very family orientated."
The social workers are finally satisfied, and ask the couple, "What age child are you hoping to adopt?"
The husband says, "It doesn't really matter, as long as the kid fits into a 14 inch cannon."

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