Pound Sterling felt down around the level of 1.3620 against the US dollar in the early European trading session this Friday. The GBP/USD felt because of the global risk-off sentiment.
That is also caused by the greenback strengthening and the dissapointing UK economy data since the early week. The inflation report in that country showed the slow down.
It is especially for the prices speed increase from 2.5 percent to become 2.0% year – on – year in July 2021. That number is lower than the consensus expectation in a range of 2.3%.
The market doesn’t have a significant reaction in responding that report. Some analysts believe that the United Kingdom inflation speed will increase again several months ahead.
The Retail Sales Data Increases the Market Concern
However, the retail sales data released yesterday was increasing the market worry to the economy recovery in the United Kingdom. The retail sales there noted a negative performance.
That was in 2.5 percent month – over – month in July 2021. The yearly growth is also noted 2.4% year – on – year increase in July 2021. That number is lower than the expectation.
It is especially the expectation made by the consensus which is in 6.0% or the 9.2% growth in June 2021. That shows that the UK recovery is left behind some other major countries.
The holiday, social events like wedding party and public restriction loosening last month has not triggered the consumers expense yet just like what people are expected.
COVID-19 is Still Becoming the Cause
Samuel Tombs as the economy expert chief in Pantheon Macroeconomics said that the increasing COVID-19 cases is the cause of this trend weakening. What is the reason?
There are so many people stay away from the shops. Meanwhile, the rest of them are forced to do a self isolation. That opinion is in line with the ONS finding about the online sales.
According to them, the online sales increased in the June period for 27.1% and July for 27.9%. Tombs predicted that the UK retail sales may be growing flat for the six months ahead.
It is because the workers salary in that country will be offset by the end of the government stimulus and the inflation increase. It is especially in the IV / 2021 quarter.
USD Touched the New Highest Level
The index of US dollar touched the new highest level since November 2020 around the level of 93.60. That was happened in the Friday trade. Two factors are supporting the greenback bullish momentum.
Those factors are the market concern about the tapering plan from the Fed and the delta variant covid cases which are increasing. It may affect the global economy recovery.
The discovery of a new COVID-19 case in New Zealand extends to its capital, Wellington. New Zealand initially imposed a three-day lockdown from Tuesday due to one new case in Auckland.
However, the local authorities have tracked 30 more cases since that situation. NZ authorities also found evidence of local transmission of delta variants which forces them to do something.
The Corona Cases Update in Various Countries
The NZ government then decided to extend the nationwide lockdown period until next week. The surge in COVID-19 Delta cases also occurred in various other countries in this world.
That is including the United States. The CDC data shows that the hospitalization rates of COVID patients from groups of children and adults under 50 have reached the highest record.
The death rate from this pandemic has doubled, especially in some states with low vaccination rates. This situation has caused the market participants to worry more about the prospects.
That is related to a general global economic recovery, as well as areas that have low vaccination rates specifically. Furthermore, some currencies are even really weak because of that.
