United Kingdom: Resilience tested as data mixed – Rabobank

Rabobank's Senior FX Strategist Jane Foley examined recent UK data in comparison to Eurozone performance. While the Eurozone's Q2 GDP grew by 0.4% quarter-over-quarter, the UK economy expanded by a more substantial 0.7% over the same period. However, UK monthly data revealed sectoral contractions and composite purchasing managers' indices (PMIs) signaling weakness in May and June.

This led to a confusing economic landscape and a significant range of GDP forecasts ahead of the release. Despite global tensions, such as the near closure of the Strait of Hormuz, Eurozone Q2 GDP initially outperformed expectations with a 0.4% quarter-over-quarter growth. In the three months leading up to May, the UK economy achieved a 0.7% increase compared to the same period in the previous year.

Nonetheless, the May monthly figure of a 0.1% month-over-month growth demonstrated that, despite a 0.3% rise in the services sector, both production and construction declined. The June composite PMI data for the UK also indicated contraction, potentially reflecting the impact of the Iran war on economic confidence. This mixed environment may account for the considerable discrepancy in economists' forecasts prior to the UK's economic data unveiling.