UK economic output slumps to record drop
UK Economic output slumped to a record drop yesterday, shrinking 20.4% between April and June. This period was when lockdown was at its strictest and is undoubtedly the contributing force here. Whilst this data is not surprising, it is still telling that this is the largest contraction of any developed economy thus far.
However the timing of lockdown compared with other economies must also be accounted for when understanding this comparison. June saw the relaxing of certain lockdown measures and as a result, GDP for the month actually recouped some losses as it grew 8.7% month on month. This can give us a window of hope for the recovery in the next quarter with restrictions continuing to ease.
The dollar resumed its poor month yesterday as hopes fade on a possible compromise between the Republicans and Democrats over additional stimulus for the US economy. Many analysts believe that one will eventually be found, especially as this is a unifying issue and lawmakers can’t go back to their constituencies with nothing to show. Trump has unsurprisingly been critical of congressional Democrats, accusing them of not wanting to negotiate over a package. Market sentiment has swing between optimism and pessimism as we still await the final outcome on this.
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