S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Brown Brothers Harriman’s (BBH) Elias Haddad says improving United Kingdom (UK) disinflation alongside solid Q2 Gross Domestic Product (GDP) should support the British Pound (GBP) against the US Dollar (USD) and Euro (EUR), but sees limited scope for a lasting rally. With spare capacity allowing markets to trim Bank of England (BoE) hike expectations, upcoming labour, Consumer Price Index (CPI) and retail sales data are expected to broadly match BoE projections.
Disinflation supports but caps Pound
“Signs the UK disinflation trend is gaining traction, following the recent solid Q2 real GDP print, would improve the growth-inflation mix and underpin GBP vs. USD and EUR. However, ample spare capacity in the UK economy leaves room for markets to trim BoE rate hike bets (60bps in the next twelve months) and argues against a sustained GBP rally.”
“UK June labor market to show wage growth slowing (Tuesday). The unemployment rate is expected to dip to 4.8% vs. 4.9% in May and the policy-relevant private sector regular pay growth is seen slowing to 2.8% y/y vs. 2.9% in May. If so, both data would match the Bank of England’s forecast.”
“UK July CPI to show underlying inflation easing (Wednesday). Headline CPI is expected at 2.9% y/y (BoE projection: 2.8%) vs. 2.6% in June, core CPI is seen at 2.5% y/y vs. 2.6% in June, and services CPI is projected at 3.4% (BoE projection: 3.4%) vs. 3.6% in June.”
“UK July retail sales are set for payback after two unusually strong months (Friday). Total retail sales volumes are expected to fall -0.4% m/m vs. 1.0% in June.”
