Markets to focus on UK economy, BOE rate decision amid fear of second COVID wave

Markets will have their eye on the BOE's policy meeting later this wee. Photo: Getty

It’s going to be a big week for investors, with eyes on the UK, as shops reopen, the Bank of England (BOE) announces its interest rate decision, and prime minister Boris Johnson enters talks with the EU Commission chief about Brexit.

As for COVID, the outlook is still bleak. In China, Beijing is bracing for a second wave of the virus after a spike in cases centred around a food market.

Other developments over the weekend that investors will be digesting include:

Britain: Shops to reopen, the two-metre rule, Brexit talks

The European Union and UK flags flying outside tje House of Parliament in London as part of a Brexit protest. Photo: Getty

Prime minister Boris Johnson confirmed all shops can reopen 15 June as part of the government's plan to ease lockdown. 

This will come as much needed relief to the economy, which it was recently revealed shrank by a record 20.4% in April, as the economic fallout from COVID set the country on course for the worst recession in more than three centuries.

The PM has also ordered a review of the two-metre social-distancing rule amid calls by businesses such as pubs and restaurants that it should be at least halved.

Meanwhile, Johnson is reportedly expected to tell the EU that the government will end the post-Brexit transition period without an agreement with the EU if a deal can’t be reached, and urge it to come to a trade agreement by the end of the summer.

Key data: The BOE’s interest rate decision is expected 18 June. The head of the Bank has said it is "ready to take action" after the UK suffered a record economic collapse.

Data on average earnings for April are expected 16 June, while the consumer price index and retail price index along with the producer price index and PPI core output for May are set to be released 17 June.

Europe: EU summit, balance of trade

The EU is set to discuss a recovery fund proposal by the European Commission.

“We view the Commission proposal mainly as a starting point for the negotiations and think it is by no means a certainty that a deal will be struck this week,” said ING analysts.

Meanwhile, Balance of trade data is out 15 June.

US: Retail sales, industrial production and Fed chair testimony

Fed Chair Jerome Powell. Photo: Federal Reserve via Getty Images

Key data: Retail sales and industrial production figures are expected 16 June. According to eMarketer's latest forecast, total retail sales — including auto and fuel sales — will drop by 10.5% to $4.9tn (£3.9tn) this year, but e-commerce is expected to increase by 18%. 

Fed testimony: Fed Chair Jerome Powell's semi-annual testimony to Congress next week is set to take place June 16.