GDP QoQ came in at .4%, as opposed to last quarter’s .9%, while annualized growth was downgraded to 2.1% from 2.9%. The pound plummeted at the beginning of the London session, still in shock after yesterday’s CBI Distributive Trades Report came in at a 22-year low. The GfK Consumer Confidence also registered at –3, worsening from May’s mark of -1. Sterling bulls will look forward to Friday’s PMI Manufacturing survey, which is expected to come in at 47.8 to help retrace to the critical $1.8000 level.
In the equities market, the FTSE 100 dropped 4.3 points in early trading to 5,104.80, after Morgan Stanley’s banking analysts cut HSBC’s ranking to “underweight” from “equalweight,” due to the bank’s rising interest rates and higher credit costs. The retail sector though benefited as Detusche Bank said the industry looked oversold, giving spark to Marks & Spencer, which gained 0.6% in early trading. Dixons shares also rose 1.0% as Merrill Lynch upgraded the company’s status from “sell” to “neutral.” All in all, volume was relatively light ahead of the FOMC meeting.
In the Bond market, the yield on the 10-year Gilt dropped to 4.17%, down four basis points and back to the 2-year low it tested on Monday. With GDP numbers revised downward, and a falling consumer confidence, concern about rate cuts haunted the market once again.
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