The first ever monthly GDP release from the ONS has indicated that the UK economy grew by 0.3% in the month of May, in line with expectations.
The fairly strong pace of growth was led by a strong services component, with retail, computer programming and legal services noteworthy contributors. However the manufacturing production figure increased by less than expected and takes the shine off what otherwise would have been a fairly upbeat batch of data.
The pound has pulled back a little in the immediate reaction but remains higher against most currencies on the day as it looks to recoup some of yesterday’s losses. Monday’s declines were measured in their nature and far from panic-selling and there remains a feeling that these latest events could well turn out to be positive for the pound in the long run, if Theresa May can remain in power.
Given the latest political developments surrounding Brexit this economic data is really of secondary importance in driving the markets and traders are now keenly watching the latest from Whitehall and any signs of a leadership challenge to PM May. Should one occur, and be successful, then there is the potential for further declines in sterling but barring this eventuality then the outlook for the pound is markedly improved with a softer Brexit seen as favourable for the pound.