Europe Under Pressure with Rising Covid Cases, UK GDP Growth Slowing in September
Fiona Cincotta November 12, 2020 7:42 AM
Covid cases across Europe continue to rise putting the covid trade back into play. UK GDP rebounded at a record rate, but less than forecast.
European bourses are heading lower on the open as vaccine optimism which has driven the rally across the first part of the week fizzles and the covid trade is back in play. Weaker than forecast UK GDP adds to the downbeat mood.
UK GDP data revealed that the UK economy staged a record recovery in the third quarter surging 15.5% in the July to September period. This came after a record -19.8% GDP collapse in Q2 during the lockdown period. As the economy reopened, businesses flung open their doors and the economy rebounded, although it did so a slightly weaker rate than the 15.8% expected.
Whilst the economy has grown for an impressive 5 straight months, it is still -8.2% smaller than in February.
Slowing growth in September
The MoM September GDP sheds more light on the picture, increasing 1.1%, down from 2.2% in August and also short of the 1.5% expected. This shows us that the UK economy was starting to slow even before lockdown 2.0 as pent up demand eased and the Chancellor’s Eat Out to Help Out scheme came to an end.
Between record redundancies and signs of growth slowing in September, the outlook for the UK economy was showing signs of weakness even before lockdown 2.0 came into play. This most doesn’t bode well for the coming months as conditions deteriorate further.
GBP/USD is trading -0.3% lower only extending losses slighty following the data. FTSE futures are pointing to losses 0.7% on the open.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.