UK economic growth outpaces the EU in both quarters this year..
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| This latest round of UK GDP figures further strengthen the view that the Bank of England won't be cutting rates again until November/December.
The 'higher rates for longer' play has been overall net-positive for GBP in the last few years and with all things considered, has been the main reason for the Pound performing at some of the best times since the Brexit vote.
A higher interest rate makes yields favourable to investors, a relationship the UK/£ has been heavily relying on since coming out of the pandemic. With UK/£ assets being bought, the price of GBP increases.
The UK GDP results for both June and Q2 were encouraging.
The economy grew 0.4% in June, easily beating May's -0.1% and the expected 0.1%. For Q2, the result of 0.3% was better than the 0.1% forecast. This puts the UK/£ in a 'good' position for the rest of summer where we should hopefully see conditions improve.
That being said, Q1's GDP number was much higher at 0.7% and the majority of analysts see a weaker H2 compared to H1, so something to be aware of.
The Pound moved up 0.5% on the day versus the Euro, meaning the pair has grown 1.5% in the last week and 1% in the last month.
The EU released their GDP figure for Q2 this morning which came at 0.1%, after being at 0.6% in Q1. A similar trend for both nations then, but the UK with the upper-hand at the moment. |
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