GBP shrugs off weak GDP – BBH

FXStreet Insights Team FXStreet

Sterling ignored disappointing UK July GDP data, but a weak growth trajectory paired with sticky services inflation leaves the BOE constrained. With policy room limited, GBP faces headwinds, particularly against the euro, BBH FX analysts report.

UK growth lags BOE forecast

"GBP ignored the UK July GDP data. Real GDP was flat m/m vs. 0.4% in June. Services and construction output both increased by 0.1% and 0.2%, respectively. Production output plunged -0.9% driven by declines in manufacturing and mining & quarrying."

"Real GDP is tracking below the BOE’s Q3 growth projection of 0.3% q/q. Unfortunately, the BOE has limited room to dial-up easing to shore-up growth because UK services inflation is stubbornly high at 5.0% y/y. Bottom line: the UK’s soggy growth outlook and elevated underlying inflation spell trouble for GBP, especially versus EUR."

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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