The British pound rose against the safe havens while falling to the risk currencies in a week mainly influenced by global risk sentiment, followed by signs of negative rates in the U.K. and disappointing economic updates.
United Kingdom Headlines and Economic data
The Conference Board Leading Economic Index for the U.K. decreased 1.3% in March 2020 to 89.4
Global risk sentiment started the week in the “on” position thanks to several catalysts: Moderna reports positive data on early-stage coronavirus vaccine trial, weekend comments from Fed Chair Powell to reiterate unlimited stimulus support, positive signs of the global economy returning to pre-covid levels. This was likely the reason for the mixed performance for Sterling, falling against the higher-yielding/riskier major currencies and rising against the “safe havens.”
UK jobless claims soar by nearly 70% in April\
Britain accuses EU of treating UK as ‘unworthy’ partner
The British pound bounces higher during the U.S. session against the higher-yielding currencies as risk sentiment shifted negative on Moderna vaccine news and more U.S.-China tensions (US could delist Chinese companies).
UK inflation slumps to lowest since 2016 as coronavirus hits
Britain borrows at negative interest rate for first time – this headline plus the low inflation rate was likely the driver for the broad move lower in Sterling against all of the major currencies during the Wednesday session.
UK house prices perked up before coronavirus hit
BoE’s Bailey re-thinking sub-zero rates, but says reviews are mixed
UK factories report biggest output drop in over 40 years
Rapid downturn in UK private sector output continues in May, but the speed of decline eases since April
Risk sentiment moved negative on more U.S.-China tensions (White House report criticizes China’s economic policies, human rights violations) and weak U.S. economic updates (U.S. jobless claims total 2.4M) during the U.S. session. The British pound moved higher against the risk currencies, while slipping against the safe havens.
U.K. GfK consumer confidence index down from -33 to -34
Bank of England to phase out some emergency COVID support
Bank of England deputy Ramsden warns of risks to BoE’s upbeat forecast
UK debt soars to highest since 1963, retail sales slump