GDP Figures Hold Strong

There was further insight into the Brexit fallout situation as early GDP figures for the second quarter were revealed this morning. The GDP figure came in as expected and did cause a spike in the GBP/EUR rate.

There had been considerable apprehension over what the data would say following the UK’s vote to leave the EU, with positive data seen as a win for Sterling.

Business trends looking positive

There was positive news from the Confederation of British Industry (CBI) yesterday who revealed there August Distributive Trade Surveys. The survey provides insight into retail and wholesale distribution companies. The data showed that executives believe the short term trends are positive and that there is optimism moving forward. If logistics companies indicated a slowdown, that could suggest there was quieter months ahead, however this good news is positive for Sterling.

Inflation rise expected with real wage growth fall

Some economists believe that next year the inflation levels could rise above 3% causing a pinch on the average household. The cost of goods would move considerably above real wage growth which is only expected to rise by 1%. Whilst 3% is the top of expectations, the Bank of England believe 2.3% is more realistic. However, high inflation is likely to encourage more households to save and could increase the unemployment rate.

Sterling looks unlikely to gain much momentum from UK data and most of the spikes I believe will come from negative data from other currencies. Personally, I believe that as more information becomes available in the coming months and there are less unknowns, Sterling will begin to strengthen towards the end of the year.