UK consumer confidence drops sharply – MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the foreign exchange market is continuing to stabilize in the near-term after absorbing the initial Brexit vote shock relatively well. 

Key Quotes

“Risk assets including commodity prices have rebounded providing a positive early signal that the negative initial Brexit shock to already weak global growth is likely to prove modest. So far the Brexit vote has not triggered a significant tightening in global financial conditions as some had feared reducing the risk of larger hit to global growth. However, the negative impact will weigh more heavily on the UK economy.

Evidence has already started to emerge that the UK economy appears set to slow sharply. YouGov Plc and the Centre for Economics and Business Research revealed overnight their daily tracker of consumer confidence “collapsed” to 104.3 from 111.9 earlier in June.  It was their lowest reading of consumer confidence since May 2013. The head of YouGov reports stated that they expect consumer confidence to decline further as some of the consequences of Brexit kick in.                    

BoE Governor Carney will speak to members of the press and finance industry later this evening. It will be the second speech from Governor Carney in quick succession since the UK voted to leave the EU. More active communication from the BoE is helping to provide reassurance alongside providing liquidity and stands ready to ease monetary conditions to support growth if required.