28/10/16 - UK Shrugs Off Brexit Effects

GBP

The Pound temporarily strengthened yesterday morning after estimates showed the UK grew by 0.5 per cent in the third quarter of the year in a sign the economy has – so far – shrugged off the effects of Brexit. The results are down from last quarter, when the economy grew by 0.7 per cent.

Brexit-supporting politicians are expected to jump on the figures as proof that warnings about the economy prior to the referendum were just scare stories. Analysis from the Treasury predicted earlier this year that if the UK voted to leave, this quarter could see growth as low as 0.1 per cent.

Sterling’s strength was short lived as data showed services was the only sector to grow as construction, agriculture and production had all decreased. The statistics from the Office for National Statistics (ONS) are the first to cover the full three months after the UK voted to leave the European Union back in June. 

Chancellor Philip Hammond welcomed the news and said it proved "that the economy is resilient". However, he warned the economy would need to adjust to a new relationship with the EU, but it was "well-placed" to deal with the challenges – possibly preparing for a bumpy road ahead.
 

USD

The orders for US business equipment fell in September by the most in seven months, indicating corporate investment is having trouble gaining traction.
 
Business investment remained slow in the third quarter as moderating demand and weakness overseas prompted companies to hold back. Even with stability in the oil sector, an inventory correction and growth in consumer spending, manufacturing will probably see little more than a gradual improvement.
 
Also in the headlines was the filing for US jobless benefits which fell for the first time in three weeks, staying near a four-decade low as employers remain unwilling to part with workers.
 

Key Announcements

13:30 – USD – Advance GDP is expected to increase to 2.5%