MNI BRIEF: UK July GDP Offers Few Clues For BOE Policymakers

UK GDP grew 0.2% in July, slightly below market expectations for a 0.3% increase, but a recovery from the 0.6% decline seen in June, the Office for National Statistics said Monday. Rolling 3-month growth was flat on the previous 3 month period, again a tenth below expectations.

The data was largely in line with Bank of England expectations, who in its August forecast pointed to modest growth in Q3, before 5 straight months of decline from Q4 2022. However, the BOE may now be more concerned that the announcement of an additional Bank Holiday for the Queen's funeral on Sept. 19 may even tip Q3 into modest negative growth, although the government's recently announced energy payment scheme could prevent any worst case outcomes.

UK financial markets were little moved on the release, with the labour market (see MNI INTERVIEW: Long-term Sickness Hits Jobs Market- BOE Haskel) and inflation data due Tuesday and Wednesday of greater interest. Sterling was last trading modestly higher versus the U.S. dollar at $1.1615.