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As we predicted yesterday the GBP rally was over before it really began as GDP figures for the UK were very disappointing.

Growth in the UK in the 1st quarter fell by -2.4% against a consensus view of -1.9% as the ONS affirmed the belief that the UK has been in recession for over a year now. The quarterly fall of 2.4% was the largest decline since 1951; a year which saw Elvis Presley drafted into the US army, the first motorway opened outside of Preston and instant noodles in British shops for the first time. Technical analysts will look at the move on sterling as a ‘false break’ and will look for a decline from here in the value of the pound.

Risky assets were not helped by the news that US consumer confidence was also worse than expected which acted as  a plague o’er both our houses’. Stock markets lost ground as investors came out of positions at the end of H1 and banked profit.

Sterling was pushed lower by the euro as its inflation reading for June was slightly better than expected: flash CPI posted at -0.1% against a consensus of -0.2% as large falls were seen in food and oil prices.

Data today is mainly forward looking and will give a good idea of economic prospects as we progress through Q3. PMIs for the European and UK  manufacturing sectors are due at 09.00 and 09.30 BST respectively with growth seen for the UK and stagnation sought for Europe. A similar measure is out for the US at 15.00 while ADP employment change, the precursor to tomorrow’s non-farm payrolls announcement, arrives at 13.15.

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