As mentioned yesterday, UK Q2 GDP figures were released this morning, which highlighted the momentous task the UK is facing to pull itself up out of its lockdown malaise. Although a record breaking -19.1% contraction was registered for the last quarter; no-one was expecting the news to be good, but perhaps not this bad. Yet, there were a few glimmers of hope by way of increased retail sales as people purchased more products online as they stayed inside. A sentiment which could be bittersweet, as thousands of retail staff face the part phasing out of the furlough scheme next month.
Despite three consecutive key data releases this week, pound traders seemingly lost their nerve before the week had started, as yesterday, some of the most violent sterling selling in weeks pushed GBPEUR and GBPUSD back into their previous ranges. Admittedly, sterling never looked comfortable above its 1.1100 mark against the euro and similarly above 1.2650 on the dollar; but the sheer volume of sellers piling into the pound before the first data was released highlights how little sentiment there is to speculate on sterling upside currently.
One hurdle down and two to go for sterling in its busy data week, and so far it is running as if someone has tied its shoelaces together before the starting gun was fired. This could be a long week.
Have a great day.
Author: Joshua Haden-Jones, Senior Relationship Manager
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