GBP: Good GDP numbers no game-changer for the BoE
June’s growth numbers in the UK beat expectations, helping to cement a 0.2% quarter-on-quarter figure for the second quarter. Digging into the details of the release, it appears that the surprise is entirely explained by a substantial jump in manufacturing production (up 2.4%), apparently related to pharma and car production. Anyway, the rest of the economy clearly showed signs of resilience too.
Our UK economist believes that the implications for the Bank of England are probably quite limited, given the numbers are not far from its forecasts and the focus is firmly on services inflation and wage growth, which are both out next week.
The pound is stronger this morning, shrugging off some recent softish momentum possibly related to news that the UK housing market was slowing more rapidly. Next week is a key one for the pound, expect some pre-CPI positioning to dominate in GBP trading and volatility to pick up.