Sterling slumps after weak GDP data -.........>

FOREX: Sterling slumps after weak GDP data

- Sterling slipped back under $1.21 to extended react lows of 1.2088 after the

release of soft UK GDP data which contracted by 0.2% Q/Q. This was also the

first quarterly contraction since 2012. Sharp falls were seen in manufacturing,

although the bulk of that decline was concentrated in April on the aftershocks

of Brexit stockpiling. This brings the Aug 1 ytd low back into view at $1.2080,

ahead of post-referendum lows at $1.1841.

- EURGBP rallied to Gbp0.9254, while GBPJPY probed the key Y128.00 level.

- EURUSD remains locked in a $1.1150-1.1250 range, with Italian politics taking

centre stage once again.

- AUDUSD remains clear of $0.6800 and we are seeing some important candlestick

patterns develop on the crosses which could aid a short-term recovery.

- USDCAD rejected a break of the 100 & 200-dma's this week with the recovery in

oil underpinning CAD across the board. Focus turns to domestic jobs data at

1230GMT. RBC expect a below consensus 5K increase in employment in July, which

would be the second consecutive sub-trend outcome after a 2.2K decline in June.