Yesterday was a case of one weak data release after another. Firstly the UK Retails Sales figures fell by 3.9%, the largest monthly fall since the series began in 1986, whereas in May sales were aided by the warm weather, Junes sunshine index was not so kind & therefore consumers were not out there spending in quite the same way.
This drop consequently put pressure on GBP, however the impact on Sterling was to some degree offset by a disappointing German Ifo survey release & a fall in Eurozone PMI data for Services & Manufacturing, pointing to a widespread slow down.
Export orders in the Eurozone fell to their lowest levels since 2003, as weak domestic demand fails to offset the slowing growth in the US & other importing nations. It is this wide spread slow down that has economists forecasting that the ECB will keep rates on hold for now.
To conclude the day the US posted weak Existing Homes Sales figures, a rise in US jobless claims & poor earnings data for several US companies, the most notable being Ford Motor Co, the worlds third largest auto manufacturer who reported a record quarterly loss of $8.7billion, resulting in a 15% fall in their share price.
GDP data out within the past hour has registered a 0.2% growth, so whilst a growth is still apparent the rate shows a slowing economy & as this is a advance estimate of GDP, there is a chance that this figure will be revised in due course, when further data from June is released.
GBP has taken strength from the GDP & rose back over 1.99 against the USD & taken GBPEUR into the high 1.26 range.
After a slow start to the week, the data has come in thick & fast over the past few days & has given us lots to ponder over the weekend.
Hazel Wilkinson | Treasury Solutions | nabCapital