Sterling slips

Sterling has lost some further ground to both the euro and the dollar to trade close to 91.5p and $1.22 respectively this morning, as the negotiations on a new UK-EU post Brexit relationship move into an important phase, while the single currency is still trading in and around $1.12 against the dollar. Equity markets recovered some ground yesterday, notwithstanding a note of caution from the World Health Organization about COVID-19, while core bond yields were little changed

The WHO is warning that the worst of COVID-19 is yet to come, as deaths from the virus surpassed 500,000 worldwide and confirmed cases exceeded 10 million, while the Chair of the US Fed, Jerome Powell says “the pandemic continues to cause tremendous hardship, taking lives and livelihoods both at home and around the world”

GDP in the UK fell by 2.2% in the first quarter of this year from the final quarter of last year, with consumer spending, investment and exports all down, though the economy is likely to have posted a much larger decline in GDP in the second quarter. Meanwhile, the number of mortgages approved for house purchase fell to just circa 9k in May, a record low

The UK Prime Minister, Boris Johnson in a speech today will commit to spending on infrastructure to support the economy while saying that balancing the books must wait until recovery is firmly established – “we will build, build, build…build back better, build back greener, build back faster and to do that at the pace that this moment requires”

In China, both the manufacturing and services PMI rose in June with both above the 50 expansion-contraction threshold. This suggests that, having been the first into lockdown and also the first out, the economy is likely to have rebounded in the second quarter following a sizeable fall in GDP of almost 10% in the first quarter

Data due today includes CPI inflation in the Euro Area and consumer confidence and house prices in the US