Lowest UK COVID Deaths Since Lockdown Began
The UK registered its lowest number of daily deaths since the lockdown began on March 23rd yesterday. As of writing, 121 people were confirmed to have died from the virus.
Along with the drop in the death toll, the Department of Health in the UK announced that it had recorded its lowest daily number of new infections (1625) in nine weeks.
Together, these data points are encouraging the view that the lockdown has been effective in stopping the spread of the virus.
Lockdown to be Reviewed this Week
The UK lockdown is due to be reviewed this week. In light of the heavily reduced infection rate, it is likely to be eased further.
While an end to social distancing is not expected just yet, the UK PM is expected to announce the lifting of more business restrictions. This will allow for the return of hospitality businesses with outdoor areas.
Given the significant negative impact of the lock-downs on the UK economy, the further easing of measures will be cheered by investors as focus shifts towards the recovery. Last week, UK manufacturing data for May (flash PMI) came in above expectations, suggesting that the worst of the damage is behind us now.
Risks to the Recovery
However, there are still downside risks to be aware of. The biggest of these is the prospect of a second wave.
If the easing of lockdown measures results in the infection rate rising back up to R1 (1 other person infected for every person carrying the virus) this could easily result in lockdown measures being reintroduced. This would weigh heavily on the economy.
Aside from that issue, there are also concerns about how quickly activity will pick up even once businesses do reopen. Many polls suggest a great deal of reluctance among the public with regard to returning to pre-virus activity.
BOE Confirms Negative Rates Under Discussion
The BOE has outlined its concern over the pace of the expected recovery. Indeed, the level of concern was reflected in comments made from the BOE governor last week, Andrew Bailey.
He said that negative rates were under “active review” for the first time in the BOE’s history. This comes just a week after the BOE said that negative rates were not under consideration. This suggests a dramatic increase in the BOE’s concern for the economy.
GBPNZD Holding At Major Support Level
GBPNZD has been trending steadily lower following the sharp reversal from 2020 highs earlier in the year.
After breaking below the bullish trendline from mid-2020 lows, price is now sitting on the 1.9882 level support.
This is a key structural level that, if broken, will open up the way for a run down to deeper support at the 1.9400 level next, taking GBPNZD negative on the year.