GBP/USD to surge on a significant UK GDP rebound
|Optimism from China and the Chancellor has pushed the cable higher, yet US coronavirus and also politics held it back. For the next week, COVID-19 statistics remain dominant but the calendar also comes into the spotlight with UK GDP and claims, while US figures are centered on the consumer, FXStreet’s analyst Yohay Elam briefs.
Key quotes
“Outside Leicester, coronavirus seems to be under control in the UK, allowing for extending the gradual reopening and leaving the focus on other topics. Investors seem to accept no progress in Brexit talks through the summer, especially as the EU is focused on thrashing out is a recovery fund.”
“GDP figures for May are due out on Tuesday and could show stability after a collapse of 20.4% in April. Britain began its gradual easing of restrictions in May. Manufacturing output is also of interest. If output surprises with a significant rebound, sterling could surge.”
“The most significant release is due out on Thursday – the jobs report. The Unemployment Rate carries expectations for an increase to 4.7% in May after remaining at 3.9% in April. The government's furlough scheme – extended through October – is keeping joblessness low. Wages are projected to bounce from the lows, from 1% to 1.4% in the gauge including bonuses.”
“Figures coming out of the Sunshine State, as well as California, Texas, Arizona, and others, are of interest. With labs struggling to cope with the pace of testing, the number of infections may plateau but deaths could continue rising.”
“The economic calendar is busy, with inflation figures kicking off the week and are forecast to edge up in June, from 1.2% to 1.3% on the Core Consumer Price Index. Thursday is a busy day. Retail sales are projected to continue rebounding from in June, but to a lesser extent than the 17.7% surge reported in May. The control group – or ‘core of the core’ is also of interest. The first half of the month saw extended reopenings, but the second half already had consumers wary of going out and about.”
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