It was a disappointing morning for the UK in regard to data – at 07:00AM this morning we had GDP 3-Month Average for July miss expectations, coming in at -7.6%, forecasted at -7.5%. GDP YoY for July also missed expectations, forecasted at -11.3%, came in at -11.3%. Goods Trade Balance also came in lesser than expected, the actual reading being -8.63B, with it expected to come in at -6.9B.
As the Brexit saga continues, odds of a no-deal Brexit increased after the European Union (EU) gave a three-week ultimatum and threatened legal action if the UK still pushed for the Internal Market Bill.
The UK is also making its trade presence known on the other side of the world, with the UK and Japan having secured a deal estimate at £15.2B. Officials in London and Tokyo have confirmed the historic agreement has been signed with Liz Truss, the UK trade minister, held a video conference with her Japanese counterpart Toshimitsu Motegi this morning. In a statement, the government noted that “the deal is tailored to the UK economy and secures additional benefits beyond the EU-Japan trade deal, giving companies exporting to Japan competitive advantage in a number of areas… It will help to create jobs and drive economic growth throughout the whole of the UK.”
While the UK’s outlook on trade appears to be improving, in contrast, the pound has been struggling of late. Cable opened at 1.3011 yesterday, but quickly slumped to a 7-week low of 1.2474, finally closing off at 1.2847.
GBPEUR also showed little resistance, opening at 1.1001, finally closed off the day losing 2 cent from the open, closing at 1.0813.
As for EURUSD, the pair opened the session at 1.1827; during the day the euro jumped 80-pips after the ECB upgraded the growth and inflation forecasts while adding that it’s not concerned about the recent appreciation of the single currency. The pair finally closed off the day at 1.1880.
On the data front, another relatively light day after the early morning releases. At 13:30 we have Inflation data from the US, with YoY figure forecasted to come in 1.2%.