Pre-Market Review
GBP Rallies as the UK Eases Lockdown

Markets in Asia rallied following on from gains on Wall Street on Friday despite another torrid reading of employment. Friday’s US jobs reported showed that the unemployment rate had jumped to above 14%. The non-farm payroll reading showed 20 million people lost their jobs in April. Despite the dire readings markets on Wall Street rallied as the number was slightly better than the 22 million expected. GBP saw some chart action as lockdown was eased in the UK and markets might see more of the Sterling coming days.

China will be in focus over the next couple of days. Expectations are that the economy will fall short of US goods purchases in breach of the US-China trade deal. Projections show that exports of US goods to China could be around $60 billion for the whole of 2020. This is much lower than the $186.6 billion agreed in the Phase One trade deal between the two nations.

The shortfall is due to the pandemic, which brought the global economy to a standstill for the last 3 months. However, the reason behind the shortfall is likely to cause much concern for Donald Trump. He has already ratcheted up his anti-China rhetoric over the last few weeks.

GBP up & UK to ease lockdown

Boris Johnson’s plan to begin the phased and conditional reopening of the UK economy has come under significant fire. The plan seems unclear and risking a second spike in the virus in the UK. In an address to the British people on Sunday, he dropped his line of “Stay at Home” to “Stay Alert”. He also stated that those who could not work from home should actively look to return to work, but without using public transport.

The GBP rallied against the US dollar on the back of the news as to whether clear or unclear this is undoubtedly the first step on the road to recovery. We might see more movement in the Pound throughout Monday. The PM should give more details on the plan when he addresses the House of Commons.

He will publish more details of his 3-stage plan in a document released just before he speaks in the commons. Market movement on the back of this event is unlikely to focus on the clarity of the statement. It might focus more on whether the key stages will realistically be in place before the second phase of the economic reopening can commence. For Sterling and the FTSE, the sole focus should be the economy, rather than the health aspect.

It’s a quiet start to the week in terms of macroeconomic readings. No major data from the US, UK or Europe are due. However, as the week moves the level and importance of data will increase. For today, Friday’s payrolls are key as the employment picture will play such a key role in recovery.