According to the report on Friday, UK consumer sentiment for last month remained constant at -41, meaning that the country’s level of confidence is still weaker than expected.
The UK retail overall sales improved marginally in July, increasing by 0.3% after declining by 0.2% in the month prior. The Office for National Statistics (ONS) reports that non-store retailing sales rates increased by 4.8% in July. Feedback indicates that various offers in the last month contributed to sales increases across the country. Fuel and other non-food sales decreased by 0.9% and 0.7%, respectively.
The Bank of England faces a more difficult situation daily. In addition, market estimates dictate that there should be further rate increases by the BoE: a total of 150 bps. 150 bps would have to be implemented for the duration of the year, whereas the upcoming meeting could very well constitute a 50 bps rate hike. Moreover, next year could potentially see another 50 bps increase. These estimates come from the headline inflation for the week, which has risen from 9.4% in June to 10.1% in July.
As yields rise daily, the UK government bond market is still repricing. The benchmark 10s UK gilt is currently trading at 2.40%, up 8 bps. The interest rate-sensitive 2s bond is trading at 2.54%, up 9 bps. The 2s/10s curve’s inversion suggests that a recession is approaching, seeing as these drops were last encountered during the 2008 financial crisis.
In the week that passed, cable has become a one-way trade due to the weakening of GBP and a resurgent greenback. 9 days prior, the price of the pair reached 1.2276, a figure more than 3.5 points higher than cable is at now. The current low grouping around 1.1860 may restrain any further decline. However, the following objective now appears to be the 1.1760 2.5 year low set last month.