UK GDP has provided Sterling with further support as the economy rebounded in June. Figures show the economy grew by 0.4% month-on-month, crucially bringing a halt to a run of negative figures and even more importantly beating expectations of only 0.1% growth.
These figures look to be strengthening the view from sections of the Bank of England that a rate cut in November isn’t needed, due to the economy growing alongside stubbornly high inflation. When you take this data release along with Tuesday’s employment data, markets are now pricing in a November rate cut at 44%.
Later this morning we have the preliminary release of European GDP data for the 2nd quarter. Current figures suggest stagnated growth within the bloc at 1.4% Year-On-Year and 0.1% for the quarter. A reflection of this might pose a problem for the European Central Bank with what they do in their next interest rate meeting.
We round the day off this afternoon with a couple of U.S economic releases. First up is the weekly jobless data, which will be keenly watched by The Federal Reserve after the weaker inflation data earlier in the week. It’s suggested that 2,000 extra claims will have taken place over the past week which again won’t be of any help to the Dollar.
Finishing off the day we have Producer Price Inflation which as it stands seems to suggest an increase with what companies are paying. It’ll be interesting to see how the figures pan out as Consumer Inflation including food and energy undershot expectations which led to the Dollar sell-off over the past 48 hours. If this afternoon’s release mirrors Tuesday then we would expect more Dollar weakness, but an increase for companies prices would lead to calls to leave interest rates unchanged and therefore supporting the currency.
GBP/EUR 1.1618 GBP/USD 1.3562 GBP/AED 4.9844
GBP/AUD 2.0780 GBP/CHF 1.0938 GBP/CAD 1.8693
GBP/NZD 2.2803 EUR/USD 1.1662 GBP/ZAR 23.8446