UK GDP bounces back in Q2
As the UK economy slowly re-opened from the pandemic lockdown in Q2 the country moved back into growth. After GDP fell by -1.6% om Q1, a bounceback of +4.4% was seen in Q2 (at the Prelim reading). This was in line with consensus estimates
Unsurprisingly, as the economy re-opened in Q2, the bulk of the growth came in the services sector (which is c. 80% of the economy):
- Services added +5.7% output in Q2
- Production +0.5% in Q2
- Construction +3.3% in Q2
The monthly GDP for June showed growth of +1.0% which was slightly higher than the +0.8% consensus estimate. It means that the and means that the UK economy is now just -2.2% smaller than it was in February 2020, before the pandemic.
However, this came as part of a package of data this morning, the bulk of which has slightly disappointed. With June’s Industrial Production showing a surprise month on month decline, and the Goods Trade Balance also worsened more than expected in June.
Taken all together, this has given a mild sense of disappointment to this morning’s data, however, given the volatility of forex in recent sessions, this is a fairly muted response.
Initial Market Reaction
There has been a mild negative reaction across sterling this morning.
- GBP/USD down by -5/10 pips
- EUR/GBP up by 2 pips