UK GDP beats gloomy forecasts

The preliminary economic growth data for the UK in the second three months of the year shows a smaller than expected contraction of minus 0.1%, against a forecast of double that and that means the annual rate of economic growth comes in at 2.9%; substantially lower than the Q1 figure of 8.7% but marginally better than the market forecasts. You obviously won’t hear much in the UK press about the GDP figures because they are a good news story but throw in some much stronger than expected industrial production numbers and an improvement in business investment and the scene was set for some Sterling strength. But guess what! Nothing happened. Maybe the variation from the forecasts is not significant enough to shift the Pound or GBP traders are still getting their Starbucks & McMuffin orders sorted, but we have yet to see the reaction. Sterling is up to $1.22 and €1.1833, but these are trivial reactions thus far. We get the NIESR estimate for GDP growth in the 3-months to July later today. Maybe that will calm nerves a little.

Euro stoic ahead of Industrial Production numbers

Inevitably, eurozone industrial production growth will have slowed in June. Energy and supply chain problems are weighing on companies throughout the world, especially in Europe due to Russia’s Sword of Damocles approach. As long as the monthly growth in June prints at around 0.2%, the euro may well continue to tread water. Any sizable variation will give traders an excuse to move the value of the euro around. The GBPEUR rate starts the day around €1.1833, and the EURUSD rate is a little higher at $1.0315.

USD fails to regain lost ground

Having lost a little value on Wednesday, The US dollar has been unable to regain that lost strength. The GBPUSD rate is at $1.22 this morning and the EURUSD rate remains relatively elevated at $1.0315. The weekly jobless claims numbers were far more rational at 252,000 new claims than the July payroll data would have suggested they ought to be but the producer price index dropped from 8.4% in June to 7.6% in the year to July. So perhaps prices are starting to calm down a little in the US. The only significant US data today is the consumer sentiment index from the University of Michigan. Many believe that will show a recovery of sorts. So, maybe the USD will regain a little composure. However, if things calm down in the US, perversely, investors tend to take their funds out of the safe-haven US Dollar and seek slightly more risk/reward elsewhere. So, USD weakness is perhaps more likely.

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