GBP Falls Further as UK GDP Hit by Manufacturing, Household Woes
- Sterling continues to weaken as Brexit fears hit household spending and manufacturing.
- Sterling could be set for further falls.
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UK growth remains slow, and below trend, as Brexit worries begin to bite.
UK second quarter GDP was confirmed Thursday at 0.3% q/q and 1.7% y/y in line with market expectations but other data showed the economy slowing further. Business investment was flat on the quarter compared to +0.6% in Q1, the weakest since Q4 2016, while household spending slipped back to 0.1% compared to last quarter’s 0.4%, the lowest level since Q4 2014.
Sterling, already under pressure from ongoing Brexit worries, fell further against both the EUR and USD. EUR/GBP traded at 0.92250, the highest level since the ‘flash crash’ on October 3 2016, while GBP/USD fell to a two-month low of 1.27845.
Commenting on today’s GDP figures, Head of GDP Darren Morgan wrote,
“GDP growth has slowed markedly in the first half of the year with relatively robust services growth, partly thanks to a booming film industry, offset by weak performances from manufacturing and construction in the second quarter.Household spending grew weakly, with the lower-value pound hitting household budgets, while business investment showed no growth at all.”
Chart: GBPUSD One Minute Timeframe (August 24, 2017)
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--- Written by Nick Cawley, Analyst
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