Iran conflict to weigh on UK Q2 growth –'Fairly marked slowdown' expected

Matthew Ryan, CFA Ebury

The Pound has traded range-bound against the dollar so far this week amid an absence of market-moving news.

With Prime Minister Burnham already away enjoying sunnier climes merely a couple of weeks into the job, and MPs in summer recess anyway, the barrage of policy announcements from the new administration has come to an abrupt halt. Investors have also had no major economic data to digest, with the revised services and composite PMI figures barely changed from their initial estimates.

Next week looks set to be moderately more eventful, with the first estimate of second quarter GDP growth closely watched on Thursday.

We expect a fairly marked slowdown from the strong 0.6% quarterly print in Q1, not least due to the disruption caused by the Iran conflict, which is seen to have weighed on business confidence and pushed up imported price pressures in the past few months.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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