• NIESR cut growth estimates to 0.3%
• Sterling falls 0.73% since beginning of trading day
• Next week’s CPI data could reflect today’s estimates

The UK’s growth cut in half in the month of July, according to the NIESR’s GDP estimate report. The data predicts growth for the last 3 months up to July, estimates have been cut from 0.6% to 0.3%.

At this stage it’s not clear if Brexit is the cause of economic slowdown, or whether other factors are at play. Although its likely Brexit had some part in the recent growth cut predictions. Sterling has lost 0.73% since the beginning of trading, with GBPEUR rates trending around the 1.168 mark.

Consumer price data next week could cause further losses for Sterling

The report today is considered highly accurate and I therefore expect next week’s CPI release to follow a similar trend, retail sales for the month of July were up despite Brexit, which could cushion some of the fall next week. However, lower growth will likely be linked to Brexit which could have implications for Sterling next week.

Will Sterling continue to weaken?

If Brexit is causing economic shock and growth continues to decline, the Bank of England may have to implement further measures to tackle low inflation, further rate cuts and stimulus could be on the table, which will likely put Sterling in a weaker position. With Brexit yet to begin, it could be that the recent run of bad economic data is a reaction to the vote, with the UK’s withdrawal from the EU not likely to happen until 2019, business confidence at least short term could improve.

On the other hand, whilst the UK remains in a period of uncertainty, investors will likely hedge their bets in safe haven currencies. Until a clearer picture of what deal the UK want post-Brexit, Sterling could remain on the lower end of the deal.

Next Tuesday’s releases could weaken Sterling to the mid teens, I’d therefore consider buying foreign currency sooner rather than later.