UK GDP data came out much worse than expected this morning at 1.8% compared to the forecasted figure of 5.5%. However, this was not enough to make up for the sharp drops in economic activity seen in the last few months with the three-month rolling average falling to -19.1%. In response, Chancellor Sunak has said that this shows the ‘scale of the challenge’ the country faces. This has led to the Pound losing ground against both the Euro and the Dollar. Manufacturing production beat predictions with a release of 8.4% but industrial production disappointed the market at 6.0%.
German monthly consumer price inflation data was released as expected at 0.6%. Eurozone industrial production as well as ZEW economic sentiment indicators for Germany and the continent as a whole will be released at 10am which is likely to cause some short-term volatility for the Euro. Italian Prime Minister Conte has urged EU leaders to come to an agreement over the proposed EU recovery fund. This comes as reports suggest Italy is preparing a €20 billion fiscal stimulus package that will include tax reliefs.
The Dollar has strengthened due to its safe-haven status as there were renewed concerns about tensions between the US and China. US Secretary of State Pompeo has suggested that China’s policy of pursuing offshore resources in the South China sea is wrong and ‘completely unlawful’. In addition, California has reimposed lockdown restriction with the total number of virus cases in the state now at 330,000. US consumer price inflation is due at 1:30pm which will be closely watched by the market.