Shock UK contraction in April; Global outlook weakens on surging UK inflation; USDILS surges past 3.4; ECB risks economic fragmentation through raising rates.
June 13, 2022
GBP/USD 1.2228 GBP/EUR 1.1670 EUR/USD 1.0478 USD/CAD 1.2838 EUR/CHF 1.0379 EUR/SEK 10.5879 EUR/NOK 10.2787 EUR/DKK 7.4391 USD/ILS 3.4400 AUD/USD 0.6994 NZD/USD 0.6313 USD/SGD 1.3893 USD/JPY 134.49 USD/CNH 6.7522 USD/INR 78.0800 EUR/ILS 3.6043 GBP/ILS 4.2063 USD/ZAR 16.0652
UK GDP missed estimates this morning, with data showing a shock contraction in April. The UK economy contracted by -0.3% missing forecasts of a 0.1% expansion. Sterling weakened following the release with GBPUSD trading -0.7% lower as we print. This follows downgraded growth forecasts for the UK, with the CBI lowering expectations to 3.7% in 2022, down from 5.1%.
Boris Johnson risks opening divisions that tore the conservatives apart in 2019 by clashing with the EU over the Northern Ireland Protocol.EUR
Macron could lose his outright majority in France’s parliament, forcing him to compromise on policy.
The ECB could face a challenge raising rates, whilst keeping the yields of the euro-areas most indebted members in check. Any action to tackle inflation risks further fragmentation of the euro-area economy.
EURUSD trades down -0.52%, and most major European benchmarks have opened at least 1% lower this morning.USD
Last week US Inflation spiked at 8.6% to its highest in 40 years, despite earlier expectations of moderating prices. Fears of persistent inflation triggered US and European futures to tumble. Last week’s release which shows that inflation did not peak in April and will likely embolden the Fed to continue with the current pace of tightening.
Spurred by global economic fears, the Dollar has strengthened 0.52%.ASIA/PACIFIC
China has been walking back on plans to ease it stringent covid measures. Shanghai and Beijing have delayed the changing of restrictions, meanwhile Hong Kong reported more than 800 new infections.
India’s CPI inflation is expected to slow today to 7.1% YoY from 7.8% YoY.ILS
USDILS surged past 3.4 in the early hours of Monday, after finding some upward momentum throughout Friday. USDILS trades up 1.3%, following global dollar strength.Data & Events
UK GDP, Industrial Production
ECB Holzmann, Simkus speaks
Israel May Trade Balance
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