UK gilts tad lower after GDP remains unchanged in Q2, shrugs off downbeat business investment

The UK gilts traded tad lower despite witnessing an unchanged GDP for the second quarter of this year and as investors largely shrugged-off the downbeat reading of the country’s business investment.

The yield on the benchmark 10-year gilts, rose 1 basis point to 1.06 percent, the super-long 30-year bond yields traded flat at 1.72 percent while the yield on the short-term 2-year hovered around 0.20 percent by 09:00 GMT.

Private consumption growth in the UK slowed further than expected in the second quarter after helping to prop up growth at the end of last year, according to official figures which confirmed the economy expanded by 0.3 percent. Household spending increased only 0.1 percent over the three months to June, down from 0.4 percent in the first quarter and worse than the 0.3 percent growth economists had expected.

The shortfall in private consumption was made up for by higher than expected contributions from government spending and particularly capital investment. However, the investment increase was driven by government spending and housing construction, with business investment flat.

Meanwhile, the FTSE 100 traded 0.37 percent higher at 7,410.75 by 09:20 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -10.45 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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