Investors will be keenly observing the events from the UK with the UK Public Sector net borrowing report due to be released at 0830 hours GMT this morning as well as the CBI Industrial order expectations report, due at 1000 GMT today.
The public sector net borrowing is used to measure the difference between public spending and incoming during the given month. Analysts expect to see the UK’s public sector net borrowing at -£2.2 billion in comparison to June’s PSNB of £14.4 billion. The report is expected to show a surplus of £3.2 billion during the month of July.
Later in the day, the Confederation of British Industry will be releasing their Industrial orders expectations report for July. The survey is being slated to show a drop to -10 in August from -6 in July. The Industrial order expectation is the level of the diffusion index which is based on the manufacturers that are surveyed. The industrial orders survey is an important economic indicator for the UK to measure the economic health and how businesses react to the changes in the economy.
The UK government had endorsed deep cuts to their public spending since 2010 in efforts to safeguard the nation’s credit ratings from being downgraded, much like most of the countries in the Eurozone. However, this strategy seemed to have backfired, with the deep spending cuts resulting in the UK’s economy to contract even further.
The increase in the budget deficit will clearly put pressure on the present government as the UK’s economy showed further contraction of 0.7% during the second quarter of the year, for three months in a row, hinting at the wave of resilience to be fading away.
In the early hours of the morning, the GBP was growing strong against the USD, gaining 0.06%. The GBP was trading at 1.5719 to the USD with anticipation on the upcoming economic data from the UK today. The early morning gains, in comparison to yesterday saw the GBP rising by 0.11% to close at 1.5710 against the USD.
The UK’s economy could continue to point towards negative growth and could potentially face more economic problems in the months ahead. Disappointing inflation and growth outlook could possibly lead to the nation’s credit ratings taking a hit. Investors will be eagerly looking forward to the revised GDP q/q figures due to be out on the 24th of August.
