UK: Sentiment have fallen to their lowest levels in over two years - BBH

Research Team at BBH, notes that the UK’s GfK consumer confidence came in at -1 in June vs. -2 expected but the impact of the Brexit vote wouldn’t be fully reflected in this monthly reading. 

Key Quotes

“Daily trackers of sentiment have fallen to their lowest levels in over two years.  Ongoing uncertainty should see these falls sustained, if not deepened.  Final UK Q1 GDP growth was unchanged from the 2.0% y/y preliminary reading, while Q1 current account gap came in at –GBP32.6 bln vs. –GBP28 bln expected.  But this is all backward-looking.  What’s more important is how the Q3 data come in.

Indeed, it will likely take a few weeks before the shock feeds into economic reports.  Expectations for a BOE rate cut as early as next month (July 14) have risen.  From the high point last week to the low point at the start of this week, the implied yield of the September short-sterling (three-month deposit) fell 20 bp.  They have recovered about 5 bp.  Many economists are projecting a UK recession.”