- UK economy grew 0.5% in June, 0.2% in Q2 (QoQ)
- US headline and core PPIs rose 0.3% last month, more than expected
- GBPUSD steady near major support zone
The UK economy showed further resilience toward the end of the second quarter, buoyed by better weather.
The cost-of-living crisis has clearly been an immense drag on the economy and due to its nature, will have hit some households much harder than others. But overall, consumer activity has been very resilient which has ultimately stopped the economy from falling into recession, an outcome that now looks increasingly unlikely.
The economy grew 0.5% in June from a month earlier, much stronger than anticipated and contributing to 0.2% quarterly growth. That’s nothing to write home about, of course, and the economy still faces enormous challenges and pressures, but inflation falling below average earnings growth could enable that spending resilience to continue.
The pound was higher on the back of the data, although it gave back almost all of those gains against the dollar following the release of US PPI data, which was slightly stronger on both the headline and core level.
When taking the revisions and other data into consideration, the numbers aren’t too big a deal in reality although they do serve as a reminder that we are approaching a stage in which the stickiness of inflationary pressures could become more clear and frustrating.
Cable buoyed by data but remains near lows
It’s been a very choppy 24 hours amid all the data and the reality is that very little has changed from a technical perspective.
Source – OANDA on Trading View
The pair continues to trade around the recent lows and the 55/89-day simple moving average band. It has neither broken below these, which could be a very bearish development or rebounded higher in any significant way.
That may be a reflection of the fact that the data has been broadly bullish for the pair which could be a bearish signal, in theory. But in the absence of a break in either direction, it’s hard to say with any real conviction at this point.
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