GBP/USD Shrugs Off Dire UK Borrowing Knowledge

GBP value, Brexit information and evaluation:

• UK public sector borrowing within the first half of the present monetary 12 months was greater than six instances the determine a 12 months earlier because of the financial price of the coronavirus pandemic.
• Official knowledge additionally confirmed that public-sector debt rose additional above the £2 trillion degree and reached its highest as a proportion of GDP since 1960.
• UK inflation in September rose to 0.5% from 0.2%.
• Nonetheless, GBP/USD held its floor as “risk-on” property benefited from rising hopes {that a} US fiscal stimulus bundle will be agreed.
• The FTSE 100 index, although, is falling again.

GBP/USD edging up regardless of poor UK financial knowledge

GBP/USD largely ignored a really poor set of UK borrowing, debt and inflation knowledge early Wednesday, suggesting some persevering with underlying vigor as “risk-on” property benefited from rising hopes of a US fiscal stimulus bundle, and financial energy in China.

There are additionally hopes that US-China relations might enhance if Joe Biden wins the US Presidential election on November 3.

GBP/USD Worth Chart, One-Hour Timeframe (October 16-21, 2020)

Chart by IG (You possibly can click on on it for a bigger picture)

FTSE 100 falls again, Brexit talks nonetheless a spotlight

Against this, the FTSE 100 index of the foremost London-listed shares was weaker in early buying and selling Wednesday and there was blended information on potential commerce offers. Whereas the EU-UK negotiations on their relationship as soon as the Brexit transition interval ends on December 31 proceed to indicate no indicators of progress, the US and the UK have launched a brand new spherical of talks targeted on items and tariffs.

UK borrowing, debt and inflation all rise

Turning to the UK financial system, the price of the coronavirus pandemic was evident in a really poor set of borrowing, debt and inflation knowledge launched Wednesday earlier than the UK markets opened. Authorities borrowing within the first half of the 2020/21 fiscal 12 months was greater than six instances the extent a 12 months earlier attributable to the price of supporting the UK financial system through the coronavirus pandemic.

Public sector debt climbed additional above £2 trillion to 103.5% of GDP, the best debt/GDP ratio since 1960.

Nevertheless, the possibly detrimental influence of the borrowing and debt knowledge was offset by the information that UK inflation rose to 0.5% 12 months/12 months in September, up from 0.2% in August.

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— Written by Martin Essex, Analyst

Be happy to contact me on Twitter @MartinSEssex