Sterling rally antagonises the FTSE as UK economy avoids recession

Sterling rally antagonises the FTSE as UK economy avoids recession

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 quitsHilary Benn’s Brexit delay billParliament being proroguedNo-Deal Brexit preparationsUK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), and analysts’ outlook for markets and currencies.