UK Data Mixed As ONS Spring GDP Release For May
A surprise inclusion into the dearth of UK data this morning as we received the May GDP data which came in at 0.3%. There is nothing to compare this with other than the fact that it has registered a gain on the month. This was something which was to be anticipated given strong consumer spending over both April and May, with the PMI's also positive and pointing to a period of economic expansion.
However, the GBP market is reacting to industrial and manufacturing data, where the former fell 0.4% on the month while manufacturing output was far less than expected at 0.4% vs 0.9% expected. Construction output was much better though, with a rise of 2.9% vs a mere 0.4% rise expected. So, there is something for everyone in these numbers, although these sectors represent less than 30% of the economy and GDP make-up.
The May trade balance was also out and saw the deficit pretty much unchanged, where a modest contraction was expected. This was all with the EU and the Non-EU balance improving from a £4.33bln deficit to £3.49bln.
GBP was bid up into the numbers as Cable managed to work its way higher to a little shy of 1.3300. In light of the political developments and resultant uncertainty from yesterday's events, the market is reluctant to get too carried away with the move and certainly against the USD. That said, we found strong support around 1.3200 yesterday so we may see a little resilience should we move down here. EUR/GBP is also refusing to get closer to 0.8800 again after the strong bounce seen off the figure last week.