GBP/USD: Optimistic UK figures not enough amid fear resurgence
|GBP/USD has failed to hold onto the highs amid the BoE decision and Sino-American tensions. For this week, the UK jobs report, GDP, the US consumer and geopolitics are all eyed, Yohay Elam, an analyst at FXStreet, informs.
Key quotes
“With coronavirus raising its ugly head in Europe, is Britain also seeing a similar increase? So far, the UK's recent figures are better, but any increase would raise the chances of a lockdown on London – perhaps the most significant threat to the recovery.”
“Brexit and US-UK trade talks both carry low expectations for a breakthrough in the near future, allowing for any piece of good news to boost sterling. On the other hand, the Sino-British front has calmed, but if London is dragged by Washington to a fresh fight with Beijing, the pound could suffer.”
“Two top-tier economic indicators await cable traders. Tuesday's jobs report will likely remain robust. The unemployment rate is set to remain at 3.9% in June – exactly where it was in January before coronavirus grabbed the headlines. The second event is GDP figures for the second quarter. Economists foresee a bounce in June to mitigate the crash already reported for April and May – resulting in a minor decline of 1.8%, similar to -2.2% in the first quarter. That would be excellent news. Any disappointment would pressure PM Johnson to prolong emergency policy schemes for longer.”
“The clash between the world's largest economies will probably garner even greater attention – as American and Chinese trade negotiators meet to take stock of the Phase One deal. Any threat to the accord may already trigger more significant jitters. The upcoming party conventions – key events in the electoral calendar – may push the Trump administration to take bolder steps, especially if he remains behind in the polls.”
“Friday features two critical events. Retail sales statistics for July will likely show a slowdown in the recovery – and perhaps a downward turn. Consumption is central to the US economy and any change is critical. Apart from the headline figure, markets will eye the Control Group. The second significant release is the University of Michigan's preliminary Consumer Sentiment Index for August. The forward-looking indicator has the last word of the week.”
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