The UK economy contracted only modestly in May, but the country has continued to show strong resilience in the face of significant pressure, far exceeding expectations.
This resilience helped keep inflation at a much higher level than the Bank of England had hoped, leading to further rate hikes and markets pricing in more hikes to come.
Last year’s economy, which is now basically stagnant, is far better off than many feared 12 months ago. We may see a little more growth going forward as lower utility and food costs free up some disposable income, but interest rates are rising so high right now that the cost is too high for many. It’s about to go up significantly, and will probably more than offset these benefits.
Rising interest rates could also weigh on future growth if they influence household spending decisions by encouraging savings in anticipation of higher interest rates or encouraging debt repayment. Only time will tell how the spending will fit. It’s more resilient than you ever expected.
China trade data disappointing again
China’s imports and exports fell at a faster pace than expected in June, another sign of a slowdown in global trade. This trend has been observed throughout the year, but clearly the situation has not improved, rather the opposite. Domestic demand has also been disappointing, as evidenced by weak import volumes, which will continue to put pressure on the economy. A targeted stimulus may sooner or later be needed, or risk falling short of the country’s once-appearing 5% growth target.
Crude oil price gains stall near $80
Crude oil prices still appear to be supported by yesterday’s US inflation report, which again saw some gains in early trading, with Brent oil continuing its rally to a comfortable level above $80. Trading just above $80 this morning and briefly above $80 yesterday, it looks more like smoke rather than generating new momentum.
that would be understandable. After all, it has risen about 12% in two weeks, largely against the backdrop of the extension of Saudi Arabia’s 1 million barrel cut through the end of August, in parallel with Russia’s export cut of 500,000 barrels. Profit-taking selling at this level isn’t too surprising and might have happened sooner without US CPI data.
Gold holdings rise, but some big challenges lie ahead
Gold is also trading slightly higher today, struggling near the notable resistance of $1,960. It broke above $1,940 yesterday on the back of inflation numbers and is now entering a retracement area where several key levels will be tested.
From a technical standpoint, these are Fibonacci retracement levels of 38.2%, 50% and 61.8% (from May high to June low), which fell to around £$1,960, $1,980 and $2,000 respectively. increase. A breakout of these could signal a return to bullish territory for the gold price, although the price could face some resistance in the near term.
Bitcoin No Change After US Inflation Report
Bitcoin was very volatile around yesterday’s inflation announcement, but in the end it did little to have a lasting impact on the price. After some big swings, it has settled down a bit, but is still well within the widely traded $30,000 to $31,000 range over the past few weeks. This consolidation will probably be rather comforting to crypto bulls, but at this stage it is not particularly clear in which direction the next breakout will be. That could depend on the news flow in the coming weeks, and some positive news on the ETF front could give the crypto space another boost.
