GBPUSD remains above the all important 1.30 level despite Q2 GDP coming in at -20.4%. This represents the biggest quarterly drop since records began and reflects just how brutal the Covid-19 impact has been on the economy with trade conditions, investments and consumption all stalling. That being said, a poor print in GDP is in effect old news, and therefore GBP currency pairs shrugged it off.
Both UK industrial and manufacturing production for the month of June have beaten growth forecasts, which is reassuring, but they were overshadowed by additional commentary from the Bank of England that is currently forecasting unemployment rates to reach 7.5% by the year end. Currently unemployment is being steadied at 3.9% with the expectation that the end of furlough will see a sharp increase in the number of people who are displaced from their work.
This afternoon we have US inflation which is due out at 12:30. Between June and July, the cost of goods in the market is expected to stay flat at 0.2%, whilst the year-on-year figure is pricing in a 0.1% drop.
The volatility index is steadily trickling lower, which I think is fairly reflected in the subdued currency world at the moment.
Have a great day.
Author: Alistair Hutson, Senior Relationship Manager
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