UK lockdown plans released as BoE leaves door ajar for more stimulus

Markets were focused on three key events last week, the Bank of England rate decision, PM Johnson’s statement regarding the lockdown, and from the US, the labour data figures. Looking further afield, key economic data across the major economies remained negative last week but the market has become acclimatised to this and not reacting as aggressively as they normally would. On Thursday, the BoE left interest rates unchanged at 0.1% and maintained its QE programme at £645bn, however two of its members voted for an increase in QE, whilst the BoE reaffirmed its readiness to provide more stimulus if necessary. The BoE also stated that it is predicting about a 30% plunge in UK GDP in H1, but its central scenario sees activity picking up “fairly rapidly” in H2. On Friday, the US non-farm payrolls confirmed the economy had lost 20.5m jobs in April which sent the unemployment rate soaring to 14.7%, by far the worst number seen since the Great Depression. Prior to this release, the weekly claims rose by a further 3.2 million, the headline figure now stands near 33 million in 7 weeks. The US has now given back all of the employment gains made since the 2008 financial crisis; a 12-year positive streak lost in the space of six weeks. Sunday’s lockdown announcement from the UK’s PM Johnson was eagerly awaited. PM Johnson laid out plans for how the economy could reopen, albeit a conditional plan. PM Johnson has stipulated that people who "can't work

2020-05-11T12:21:20+00:00May 11th, 2020|

US Dollar Trades at a 3 Year High as Coronavirus Concerns Grows

Last week we saw sterling test the upper end of its recent trading range as positive economic data continued to reinforce the declining probability of rate cut from the centre bank in the short and medium term. It was suggested at the January Bank of England meeting that we could see an economic bounce following the result of the general election. The UK’s economic readings last week saw manufacturing rise by the fastest pace since last April, retail sales increased, and inflation pushed higher, however the pace of wage growth slowed but is still surpassing inflation comfortably. US Dollar strength continues to be the driving force in the market as risk aversion surrounding coronavirus dominates. The US Dollar Index (USD vs a basket of currencies) is near its 14-month range high whilst the US dollar is at highest level against the euro since mid-2017. Over the weekend, it emerged that the problem may be getting more serious as the World Health Organisation stated the window of opportunity to contain the virus was "narrowing". In addition, Italian officials imposed strict quarantine restrictions in two northern "hotspot" regions close to Milan and Venice whilst South Korea has raised its coronavirus alert to the "highest level". Economic concerns surrounding coronavirus centre around the impact to global growth as the supply chain are affected. Looking to the week ahead, UK parliament returns from it recess with the focus being on the release of the UK’s mandate to negotiations with

2020-04-06T10:48:35+00:00February 24th, 2020|