Yesterday, UK flash manufacturing & services PMI data beat market expectations giving the Pound some support early in the morning. Manufacturing PMI came out at 50.1 compared to 45.2 which was forecasted whilst services PMI saw a release of 47.3 compared to the predicted figure of 40.5. It is also expected that the UK economy can return to growth in Q3 2020 although uncertainty over the employment market and Brexit is likely to influence the Pound in the coming month. In addition, Prime Minister Johnson has announced further easing to lockdown restrictions that will be applicable from 4th July onwards.
Eurozone flash manufacturing and services PMI data both came out better than expected which gave the Euro a boost against the Dollar. The European Council has announced an in-person summit for EU leaders to attend to discuss and find a compromise over the proposed recovery fund on 17th-18th July. Germany predict that their economy will experience contraction by 6.5% this year followed by 4.9% growth in 2021, although if there is a second wave of coronavirus cases then Germany’s economic recovery is likely to be slower.
US manufacturing data disappointed the market leading to some Dollar weakness yesterday afternoon. President Trump has also reiterated that the phase one trade agreement with China is still in place which also undermined the greenback’s safe-haven status. FOMC member Bullard suggested that the economic impacts of the coronavirus pandemic has not been as bad as initially fears and thinks the US economy is currently at 90% of its usual capacity.