United Kingdom: Upside GDP surprise, limited BoE impact – TD Securities
TD Securities reports that United Kingdom (UK) Gross Domestic Product (GDP) for June surprised to the upside at 0.3% m/m, driven by a strong services sector expanding 0.4% m/m. May was revised to flat, leaving June as the only positive month in Q2.
The United Kingdom's Gross Domestic Product (GDP) for June exceeded expectations, growing by 0.3% month-over-month, with the services sector driving the increase at 0.4% month-over-month. This positive performance came after May was revised to flat, leaving June as the sole positive month in the second quarter. Quarterly growth reached 0.4% quarter-over-quarter, slightly surpassing the Bank of England's projections of 0.3% quarter-over-quarter.
However, TD Securities argues that this growth does not signify a fundamental growth story or a clear case for rate hikes by the BoE, as it is primarily driven by the strength in Q1. June was the only positive growth month in Q2, as May was revised to flat. While the UK economy grew in line with market expectations on a quarterly basis, it is unlikely to influence those members of the Monetary Policy Committee (MPC) voting for a hold during their next meeting.
The GBP/USD pair remained volatile around the 1.3500 level, amid mixed UK data, poor US results, and the ongoing uncertainty surrounding the US-Iran conflict.
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