16/07/2018 - Survey Reveals Boost in UK Business Confidence

GBP

Confidence from businesses in London and across the UK has hit its highest point since before the EU referendum two years ago, according to survey published today. A long-running index tracking the outlook of more than 1,500 firms from across the country rose further above the long-term average to a reading of 25 per cent in the second quarter. While firms’ confidence in their own prospects improved, the poll found that the net balance of firms looking to increase investment in the next six months fell by a point to 12 per cent, suggesting considerable uncertainty about the broader macroeconomic environment. Uncertainty over the Brexit process remains the biggest risk , with 21 per cent of firms citing it. Over a third of businesses expect a negative impact on business if no trade agreement is reached with the EU. Weaker UK demand was the second-biggest risk.

Bank of England Deputy Governor Sir Jon Cunliffe has indicated a cautious approach to raising interest rates. Cunliffe, who was one of two members on the Monetary Policy Committee (MPC) to vote against a rise in interest rates last November, argued that wages did not seem to be rising as fast as the three per cent annual rate originally anticipated by the Bank of England. With the UK economy growing 0.2 per cent in the three months to the end of May, Cunliffe added that the data suggested "the domestic economy is likely to generate the relatively gentle inflation pressure necessary to meet the target over the next two years".

USD

China’s trade surplus with the United States swelled to a record in June as its overall exports grew, this could further inflame a bitter trade dispute with Washington. But signs exporters were rushing shipments before tariffs went into effect in the first week of July suggest the spike in the surplus was a one-off, with analysts expecting a less favorable trade balance for China in coming months as duties on exports start to bite.

The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items. China’s trade surplus with the United States, which is at the center of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further heap pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other’s goods. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods - nearly the total amount of U.S. imports from China last year.

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12:30 - USD: US Retail Sales ( Ex Auto) June expected to fall from 0.4% to 0.9%