Daily Brief

Daily Brief

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GDP and a general election?

Summer slowdown

Following on from the pound’s fourth successive weekly gain against the euro, investors are hoping for more of the same this week. As Parliament prepares to hold a second vote on holding a general election, sentiment suggests that the opposition will reject the move and finalise the legislation for seeking an extension to Brexit. 

GDP data released this morning shows a 0.3% growth for the UK economy in July, a recovery on the 0.2% contraction recorded in Q2. As a result, GDP growth came out flat over the last three months, with Rob Kent-Smith, Head of GDP at the ONS, noting “falls in construction and manufacturing” and summarising "While the largest part of the economy, services sector, returned to growth in the month of July, the underlying picture shows services growth weakening through 2019.”

High hopes for USA

Consumer Credit is the only data expected from the US today, with the majority of data expected in the latter half of the week. There are high hopes for inflation data on Thursday and Friday’s retail sales figures, if slightly more measured than the powerful gains over the last two months. In light of this and all prior positive data, investors still do not foresee an eased response to rate cuts from the Federal Reserve. 

Relief for Germany

As fears grow over a potential recession in Germany, there was relief for the country in the form of their Trade Balance. The figure widened to 21.4bn euros, reflecting its biggest growth since March and a surprise gain for investors. Exports were forecast for a 0.5% drop, but defied investors to rise 0.7% from June. 

Sentix Investor Confidence is due later today, with most eyes cast towards Thursday’s crucial ECB meeting. A further stimulus package is expected, as uncertainty continues over Brexit and the escalating US-China trade war. 

China boost the stocks

The weekend saw China’s central bank launch their new stimulus package, designed to counteract the impact of US tariffs on their companies. As a result, the Shanghai exchange saw a 0.8% boost, while Japan rose 1.0%. Europe also saw the benefit by climbing to a five week trading high, with fears about the impact of the US-China Trade War alleviated slightly. 

Climbs amongst likelihood of a Brexit extension

Climbs amongst likelihood of a Brexit extension

EUR: All eyes on Thursday’s ECB meeting

EUR: All eyes on Thursday’s ECB meeting

USD: Optimism after recent success

USD: Optimism after recent success

CNY: Stimulus boosts the stocks

CNY: Stimulus boosts the stocks

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