Breaking: UK Prelim GDP drops 0.2% q/q in Q2, surprises negatively – Cable falls sharply below 1.2100

The first estimate of the UK GDP came in at -0.2% q/q in the second quarter of 2019, down from +0.5% seen in the first quarter, while missing the consensus forecasts of 0.0%.

While on an annualized basis, the UK economy’s growth rate arrived at +1.2% in Q2, missing the expectations of +1.4% while decelerating from a +1.8% previous figure.

Main Points (via Office for National Statistics)

  • Services sector output provided the only positive contribution to GDP growth, although growth in this sector slowed to 0.1% in Quarter 2 2019.
  • The production sector contracted by 1.4% in Quarter 2 2019, providing the largest downward contribution to GDP growth; the fall was driven by a sharp decline in manufacturing output, reflective of increased volatility in the first half of 2019.
  • Nominal GDP increased by 0.4% in Quarter 2 2019, down from 0.9% in Quarter 1 2019.

Separately, the UK GDP monthly release showed no growth in June versus +0.1% expected and +0.2% previous.

Meanwhile, Index of services (June) arrived at 0.1% vs +0.3% 3m/3m expected.

The Cable dropped sharply to test the weekly lows near 1.2080 region in a knee-jerk reaction to the UK GDP negative surprise before quickly reversing to the pre-data release levels near 1.2115 region.

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