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This morning’s UK public sector net borrowing data revealed that net borrowing (excluding banks) rose to £25.6bn in April 2023, up from £13.7bn a year before. This was well above market expectations of £18.7bn and marked the second-highest April borrowing figures on record (since 1993).
Next, the spotlight will be on one of the leading indicators of the UK’s economic health, the S&P Global manufacturing PMI. Markets have forecast today’s flash reading to remain unchanged from the previous 47.8. The data will be released at 9:30am.
The remainder of today is quiet for UK data however, things pick back up tomorrow with several key releases scheduled in at 7am — yearly inflation will be one to watch.
Reports have surfaced highlighting that the UK government has sold a £1.26bn stake in the major retail and commercial bank, NatWest, bringing the state’s shareholding below 40 per cent, for the first time since the bank’s emergency bailout over a decade ago in 2008.
Junior doctors in England have announced a new 72-hour strike will take place in June. This comes after the British Medical Association (BMA) union, criticised the government’s offer of a 5 per cent pay rise, saying it was not “credible”. The strike is set to take place between 7am on Wednesday 14th June and 7am on Saturday 17th June.
In the eurozone, Germany’s Ifo business climate and current conditions data will both be released tomorrow — investors will be particularly keen to see the Ifo’s business climate indicator, as results in line with, or greater than, forecasts can have a positive impact on the euro.
Also in the eurozone, president of the European central Bank (ECB), Christine Lagarde, will deliver a speech at the end of the business day. Lagarde’s speech comes after borrowing costs in the euro area hit their highest levels in over a decade, following seven consecutive rate hikes as the ECB attempts to combat high inflation.
US equities ended Monday on a mixed footing as investors awaited major updates on debt ceiling talks. The Nasdaq gained half a percent, while the S&P finished in positive territory. The Dow Jones closed 140 points lower on Monday.
It was a similar story for European stocks yesterday, with Spanish stocks finishing on a high and French stocks closing somewhat lower. The Spanish IBEX 35 rose by over half a per cent to 9,305 on Monday, while the French CAC 40 index finished about 0.2 per cent down, at 7,479.
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GBP: Sterling on mixed footing
Sterling enters the day on a mixed footing against the euro and US dollar. Compared to this time last week, GBP/EUR remains somewhat unchanged but on a monthly comparison, sterling has strengthened by over two and a half per cent. Against the US dollar however, the pound is weaker on both a weekly and monthly comparison.
Lack of key economic data is likely to be a contributing factor to this — so all eyes will be on tomorrow’s inflation data to see if it causes further volatility for the pound.
GBP/USD over the past year
EUR: Consumer confidence rises gently
On Monday, markets saw the latest consumer confidence indicator edge up gently to -17.4 in May 2023. The preliminary estimates showed that consumer confidence in the eurozone reached a high not seen since February 2022.
USD: Fed’s Waller to speak
Member of the Federal Reserve’s (Fed) Board of Governors, Christopher J Wallis, is due to deliver a speech tomorrow afternoon. Economists all over will be listening out for any hawkish comments, as these could boost the US dollar. Wallis’ speech follows the Fed’s tenth consecutive decision to raise interest rates — this time by 25 basis points to 5.25%.
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