GDP Steers UK Away From Recession

GBP

The pound initially soared on Monday morning after economic output in July increased by 0.3% from where it was in June. This is the biggest rise since January and beat all forecasted expectations, which pointed to a more modest rise of 0.1%. This is particularly surprising given how Brexit no-deal fears have recently kept economic output depressed as uncertainty weighs on the performance of the UK economy.

However the gains were trimmed in the afternoon as further political uncertainty was whipped up by the announcement that John Bercow would be standing down. Due to the fact the speaker has been seen of supportive of no-deal opposition, this has been interpreted by some as leading to an increase in the chances of a no-deal as a more neutral replacement is likely. However, Bercow announced he would not be leaving his post until the 31st of October, after a likely delay.

EUR

The euro found some respite on Monday after a report hinted that Germany may boost fiscal stimulus as a way of boosting growth in the region. Germany is considering the formation of “shadow budget” as a way of enabling the government to boost public spending without incurring the restrictions of debt rules.

Key Announcements

09.30 – GBP: Average Earnings Excluding Bonus (3Mo/Yr) (Jul); expected to fall to 3.8% from previous 3.9%
09.30 – GBP: ILO Unemployment Rate (3m) (Jul); expected to remain at 3.9%

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    Jul 22, 2019
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    Michael Hudson, Portimão

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    Jul 22, 2019
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