Jobs availability, The Sterling and Boris Johnson, Second Wave.

After the loss of 20m jobs in April alone for the US, expectations were high that May’s non-farm payrolls report would produce further job losses in the millions. This turned out to be far from true, as the numbers for May confounded expectations with 2.5m jobs added, breaking another record for jobs gained in the process. A resilient USD was the result.

Final Q1 GDP numbers are unlikely to tell us anything new about the UK economy’s performance at the beginning of the year. The economy was slowing even before the March lockdown, largely due to widespread flooding in February, which hit consumer spending. On a quarterly basis, the economy is expected to contract by -2%, and on an annual basis by -1.7%. The lockdowns that started across Europe in March are expected to result in big declines in both imports and exports, which are expected to fall -10.8% and -5.3% respectively.

Tri Nation

Sterling lost some ground against the US dollar in the last week. Considering the double-dip recession of the UK economy all eyes will be on Thursday’s release of the UK 3Q GDP, with most institutions pricing in additional BoE easing.

Elsewhere, it has been a tough gig for Boris Johnson in his weekend media round, as he sought to persuade an anxious public that he was both as “fit as a butcher’s dog” and a hands-on father to a new baby. Lockdown restriction liftings are still being questioned while the threat of a second wave looms over the UK economy

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Millbank FX Weekly Updates
29th June 2020