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UK Weekly Commentary - 20 July 2020

UK weekly commentary from Awa Brokers covering highlights, what we’re thinking about the markets and what your clients may be asking this week.


What we think

As public sector borrowing rose by 34.8 billion, the yield on the Treasury Gilt auctioned increased to 0.683%. Although steel production and house prices also rose, what we need to know is whether consumer confidence is still pessimistic. In that respect, the numbers were not impressive.

Week ahead

Public Sector Net Borrowing (Jun) - The difference between spending and income for public corporations, the central government, and local governments during the prior month rose by 34.8 billion, higher than expected, indicating a budget deficit.


Public Sector Net Cash Requirement (Jun) - The public sector cash requirement was 44.033 billion, less than the previous requirement of 71.436 billion.


30-Year Treasury Gilt Auction – The yield on the Treasury Gilt auctioned rose to 0.683% from 0.604% in May.


House Price Index (YoY) - The change in the selling price of homes rose by 2.1% YoY, higher than price change of 1.1% in April.


CBI Industrial Trends Orders (Jul) – The economic expectations exhibited by executives of manufacturing companies in the U.K. is forecast to decline by 38 points, an indication that expectations are for lower volumes.


Steel Production (Metric Ton) (Jun) – Steel production continues to increase YTD, reaching 700.00K in June.


GfK Consumer Confidence (Jul) - The level of consumer confidence throughout the United Kingdom indicates pessimism and is expected to decline by 26 points.


Core Retail Sales (YoY) (Jun) - The change in the aggregate value of sales at the retail level across the country (excluding auto sales and fuel) has been negative since March and is expected to fall by 3.7% YoY.


Core Retail Sales (MoM) (Jun) - The change in sales across the U.K. (excluding auto sales and fuel) is forecast to rise by 7.5%, higher than previous. Change in sales rose by 10.2% in June, higher than forecast. This indicates strong support for the GBP.


Retail Sales (YoY) (Jun) – Value of retail sales is forecast to fall by 6.4% YoY. Retail sales have been negative since March.


Retail Sales (MoM) (Jun) – Retail sales is forecast to increase by 8.0%, lower than the previous reading, which was stronger than forecast and supportive of the GBP.


Composite PMI – The Composite Purchasing Managers' Index was confirmed at 47.7, up from the previous reading of 30.0.


Manufacturing PMI - The Manufacturing Purchasing Managers' Index was confirmed at 50.1, up from a previous reading of 40.7. This indicates the manufacturing sector is expanding.


Services PMI - The Services Purchasing Managers' Index was confirmed at 47.1 in June, up from the previous reading of 29.0. The reading suggests the service sector is in contraction.


CFTC GBP speculative net positions - The net positions for ""non-commercial" (speculative) traders in U.S. futures markets fell by 13.6K. Net positions have been negative YTD.


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