Morning Report: 29 July 2016

29th July 2016 By: Ranko Berich

GBP Sterling gave up most of its gains from Wednesday over the course of yesterday, as Consumer Confidence figures released by research company GfK showed sentiment plummeting. The Index, which has been running since 1974, registered the sharpest month on month fall in confidence since 1990. Among the sub-indices that comprise the index, the biggest fall was in consumers’ opinions of the general economic situation. Theresa May visited Slovakia and Poland, delivering a warning that Britain’s referendum meant that inward migration to Britain would have to fall. Poland’s Beata Szydlo echoed statements from other European leaders on the topic, emphasizing that movement of workers was one of the fundamental four freedoms of the single market. Today at 09:30 BST, Bank of England money supply data will be released, including net lending and mortgage approvals.

EUR The euro extended its gains versus USD yesterday, and also reversed some of its recent losses to sterling. German Consumer Price Index inflation rose 0.3% in July, according to preliminary estimates, while the Spanish Unemployment Rate fell to its lowest level in almost 6 years: 20%. Today is a busy data for the euro, with disappointing French Gross Domestic Product Data, Consumer Spending, and Inflation already released alongside similarly disappointing Spanish CPI and German Retail Sales. Spanish GDP grew an impressive 0.7% in Q2. At 10:00 BST eurozone wide CPI and GBP will be released, alongside the unemployment rate. At 21:00 BST the results of the European Banking Authority’s Bank Stress Test Results will be released.

USD USD managed to recover some of its losses from Wednesday against sterling, but extended its losses against the euro. More dramatic developments unfolded overnight, however, as the greenback weakened dramatically against the Japanese yen after the Bank of Japan delivered a modest easing package that fell short of market expectations. Weekly Unemployment Claims were once again low yesterday, coming in at just 266,000. Today at 13:30 BST Gross Domestic Product data from the second quarter will be released, alongside the Employment Cost Index. The Chicago Purchasing Managers Index will be released at 14:45 BST.

CAD It’s been an uneventful week for the loonie, which has slowly recovered from Monday’s losses against USD, despite a lack of fundamental data and falls in crude oil prices. Today at 13:30 BST monthly Gross Domestic Product growth data will be released, alongside price Indices for Raw Materials and Industrial Products.

UK News

  • Reuters. UK consumer morale posts biggest drop since 1990 after EU vote – GfK. British consumer morale suffered its sharpest drop in more than 26 years after last month’s decision by voters to leave the European Union, as Britons became increasingly pessimistic about the economic outlook.
  • Reuters. New UK home registration hits highest since 2007 in run-up to EU vote. The number of new homes registered for construction in Britain rose in the second quarter to its highest since the financial crisis as building plans picked up before the EU referendum, an industry group said on Friday.