UK Q2 economic growth remains relatively robust, in line with market consensus

The United Kingdom’s economic growth during the second quarter remained relatively robust, largely in line with market consensus. Also, rise in investment has catered to the strong footing of the gross domestic product.

The revised UK Q2 GDP data registered 0.6 percent growth in the three months leading up to the European Union referendum concerning Britain’s membership in the common currency bloc, data released by the Office for National Statistics showed Friday. Also, quarterly growth for investment will provide a small boost to confidence surrounding the outlook.

Moreover, household expenditure increased 0.9 percent for the quarter, the strongest reading since the third quarter of 2014, while investment increased by 1.4 percent following a 0.1 percent decline for the first quarter. A stronger reading for capital spending is a positive development and suggests referendum uncertainty did not have a major negative impact on second-quarter investment.

The trajectory from last month’s sharp decline, especially in the services sector will provide important evidence on whether GDP contracted for third quarter and the risk of technical recession over the second half of 2016.

Meanwhile, market reaction was limited given that the data was in line with expectations, but the investment data provided a small net boost to confidence. Sterling edged higher with GBP/USD back above 1.3200, while EUR/GBP dipped to 0.8535 from 0.8550.