UK Data filled with negative surprises

Economic data from the United Kingdom showed unexpected signs of a slowdown last week, with weaker-than-expected data reported in trade, production, and house prices and all three purchasing managers’ indexes (or PMI).

Such a distinct slowdown has been interpreted by the markets (BWX) as the beginning of stagflation in the UK economy, which has been suffering from a fragile political situation and a pending separation from the European Union.

Is the British Pound Facing the Risk of Stagnation?

The British pound (FXB) retreated from its recent surge to 1.30 against the US dollar (UUP) after policymakers at the Bank of England mentioned the possibility of a rate hike in the near future. The pound (GBB) closed the week at 1.3, a fall of 0.96 against the US dollar (USDU).

The Bank of England cut the UK interest rate to a record low of 0.25% in August 2016 to combat the negative impact of the historic Brexit vote in June 2016. The UK minority government, which recently survived a confidence vote, has initiated Brexit talks, but the process is expected to take a long time.

Short positions at their lowest in six weeks

According to the latest Commitment of Traders (or COT) report on July 7, 2017, currency market speculators have added 11,000 long positions on the pound, but total net positions remain short.

These data only reflect as late as July 4 of last week, and there may have been some changes after weak economic data were reported later.

The week ahead

Britain’s economic calendar consists of June labor data, average household earnings, and the BRC’s (British Retail Consortium) June report on retail sales.

Household earnings and retail sales are likely to shed further light on the region’s slowing economic conditions. Further weakness in the data is likely to put pressure on the pound and throw the Bank of England’s hawkish tone into question.

Latest articles

19 Jul

Barrick Gold Reaches Deal to Buy Acacia Mining

WRITTEN BY Anuradha Garg

After a long standoff, Barrick Gold (GOLD) and Acacia Mining (ABGLF) have reached an agreement.

19 Jul

Comcast Shares Pop on Goldman's Optimism

WRITTEN BY Ruchi Gupta

Comcast (CMCSA) shares popped after Goldman Sachs issued a positive note on the company recently. Goldman upgraded its rating for Comcast to "buy" from "hold."

19 Jul

Why Analysts Are Bearish on Netflix Stock

WRITTEN BY Aditya Raghunath

Netflix stock fell over 10.0% on Thursday and is down 0.5% today as well.

On Thursday, pet retailer Chewy (CHWY) reported its first-quarter results after the market closed. The company reported its earnings for the first time.

Kenya’s Safaricom and South Africa’s Vodacom want to team up to purchase M-Pesa rights from Vodafone (VOD).

Cleveland-Cliffs (CLF) released its second-quarter results today before the markets opened.