Much to the delight of UK business leaders, the UK economy rebounded from its 0.2% contraction in Q2 2019, and in turn avoided the ‘technical recession’ label given to an economy with consecutive quarters of contraction (Germany, for instance). After a meek start to the day, this surprisingly positive news, and the expected assent of Hilary Benn’s No-Deal-blocking Bill give Sterling a lease of life during trading on Monday, Inversely – and correspondingly, FTSE dipped.
Speaking on Monday’s market movements, Spreadex Financial Analayst Connor Campbell said,
“After a shaky start sterling rediscovered the spring in its step on Monday, aided by a surprisingly strong morning for UK data.”
“The main turning point for the pound was news that the country saw a return to growth in July. The GDP reading rose 0.3% against the 0.1% increase forecast, allaying fears that the UK economy would enter a technical recession in this quarter. There were supporting roles for the manufacturing and industrial production figures, which came in at 0.3% and 0.1% respectively against the previously forecast -0.3%.”
“This, combined with confidence that MPs will prevent the government from calling a snap election – AND the likelihood that the Brexit-extension-seeking Benn bill will receive royal assent at some point this evening – rejuvenated sterling. Against the dollar it rose 0.4%, having been down as much at the start of the session, allowing cable to push past $1.234. Against the euro it wasn’t quite as keen, though it still managed to swing from -0.4% to +0.2% as the day went on.”
“Predictably the pound’s recovery saw the FTSE move in the other direction. The UK index had quickly crossed 7300 after the bell; a few hours later and it has tumbled 0.8%, dragged to a one-week low of 7220. In contrast, the DAX and CAC were up and down 0.2% respectively, with the Dow Jones knocking on the door of 26900 thanks to a 90 point increase.”
Other news and macro financial updates have come from; Jo Johnson quits, Hilary Benn’s Brexit delay bill, Parliament being prorogued, No-Deal Brexit preparations, UK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), and analysts’ outlook for markets and currencies.