Return to daily updates Friday May 22nd 2020

UK government borrowing at record high

Headlines

  • UK government borrowing at record high
  • Safe haven flows into the dollar
  • AUD and NZD suffer on China legislation

GBP

  • The UK government has borrowed more in one month than any other on record, with the public debt now close to 100% of economic output. Retail sales also fell by a record 18% pushing the pound slightly lower this morning. Sales volumes in retail were down 18.1% in April from march which was also higher than expected painting a grim picture of how the coronavirus lockdown is effecting the UK economy. GBPUSD is down over 0.4% this morning off the back of the news. Markets will also be looking to Brexit talks to determine how the pound performs over the coming months.

EUR

  • Germany reports 460 new virus cases and 27 new deaths in its latest reports. Markets will be eyeing virus data as to see how quickly the eurozone economies can recover. The euro continues to trade fairly strong against a basket of currencies especially the pound.

USD

  • The greenback was higher this morning after safe haven demand crept back into the marketplace as well as worries about the China-US relationship. After a day on the back foot yesterday, especially against the Euro, moving to a high of 1.10, the dollar fought back sitting at 1.0925 as I type. US President Donald Trump also added the US would act “very strongly” against China’s new legislation on Hong Kong, so something to watch carefully.

Other currency news

  • The AUD and NZD lost out overnight after China imposed a new security legislation on Hong Kong after last year’s pro-democracy unrest, risking geo-policital tensions as well as further tariffs and trade restrictions globally. The Yen edged higher on safe haven slows, as did the swiss franc.

Amir Mehrad
Market update by Amir Mehrad
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