UK economy to show very slow start to Q3
The pound has traded within a fairly narrow range against the dollar so far this week, a trend that could potentially continue for the next few days, barring a big surprise in Thursday’s US CPI report.
There are few economic data releases of note out of Britain either today or tomorrow, but markets will be paying close attention to Friday’s monthly GDP report for July.
Economists are expecting a very slow start indeed to the third quarter of the year, with no growth at all seen.
For now, we are giving greater weight to political developments in the UK than we are macroeconomic ones. Last week’s cabinet reshuffle has not had a real impact on sterling, largely due to the fact that Rachel Reeves has clung onto her position as Chancellor of the Exchequer.
Yet, with significant tax hikes almost certainly on the way in the autumn budget, investors will likely be as calm as popcorn in a frying pan in the lead up to the big day on the 26th November.
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.
