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UK Weekly Commentary - 30 June 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

UK consumer confidence remains pessimistic, amid a fall in Mortgage Approvals and New Lending to Individuals. GDP also fell by 10.4% in the three months to April, as government restrictions on movement dramatically reduced economic activity, according to data released by the Office for National Statistics (ONS). Although the Purchasing Managers' Index indicates that the service sector is in contraction, manufacturing is forecast to expand and Business Investment is expected to rise Year over Year.

Week ahead

BoE Consumer Credit (May) – Consumer credit plunged by 4.597 billion, worse than estimates of -2.500 billion, following a previous reading of -7.399 billion. M4 Money Supply (MoM) (May) – Money supply rose by 2.0% MoM, above previous reading of 1.5%. Mortgage Approvals (May) – Mortgage approvals were 9.27K, less than estimates of 25.00K, failing to reverse the continued decline in approvals since March 02. Mortgage Lending (May) – Mortgage lending took a nosedive (0.29 billion as of June 02) after reaching a high of 4.80 billion in May. The actual reading of 1.22 billion beat estimates of -1.00 billion. Net Lending to Individuals - New credit to consumers fell, from a high of 5.8 billion in January to -6.9 billion in June. GfK Consumer Confidence (Jun) – Consumer confidence remains pessimistic and is expected to decline by 34 points. Business Investment (YoY) (Q1) – Business investment is expected to rise 0.7% YoY, below previous reading of 1.8%. Business Investment (QoQ) (Q1) – Business investment is expected to be 0.0% QoQ, following a previous reading of -0.5%. Current Account (Q1) – The value between exported and imported goods, services and interest payments are expected to decline by 15.4 billion. GDP (QoQ) (Q1) - Gross Domestic Product is forecast to decline by 2.0% after 0.0% was recorded in the previous period.

GDP (YoY) (Q1) - Gross Domestic Product is forecast to decline by 1.6% YoY after 1.1% was reported in the previous period. Actual figures as of June 12 were weaker than estimates. BRC Shop Price Index (YoY) – Price changes hit a low of -2.4% as of June 02, down from -1.7% in April. Nationwide HPI (MoM) (Jun) – Change in house prices slid by 1.7% in June, following a 0.7% rise in May. Nationwide HPI (YoY) (Jun) – Actual change in house prices eased to 1.8% YoY in June, worse than forecast, following a 3.7% rise in May. Manufacturing PMI (Jun) – The activity level of purchasing managers of 50.1 (as of June 23), was better than forecast and indicated expansion in the sector. 30-Year Treasury Gilt Auction – The 30-Year Treasury Gilt auction yield was 0.025% on May 28. 5-Year Treasury Gilt Auction – The 5-Year Treasury Gilt auction yield was 0.037% on May 14. Composite PMI (Jun) - The activity level of purchasing managers was 47.6 in June, an indication of contraction. Services PMI (Jun) - The Services Purchasing Managers' Index indicates a contraction. Services PMI was 47.0 as of June 23.

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