The Dollar received a boost yesterday afternoon after figures revealed the U.S. economy grew a bit faster than previously estimated in the second quarter, recording its quickest pace in more than two years. Gross domestic product increased at a 3.1 percent annual rate in the April-June period which was an upward revision from the 3.0 percent rate of growth reported last month which reflected a slightly faster pace of inventory investment.
Analysts warned the momentum probably slowed in the third quarter as Hurricanes Harvey and Irma temporarily curbed activity. Harvey, which struck Texas, has been blamed for much of the decline in retail sales, industrial production, homebuilding and home sales in August. Further weakness is anticipated in September after Irma slammed into Florida early this month.
The hurricanes continue to impact the labour market and are expected to cut into job growth this month. In a third report, the Labour Department said initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 272,000 for the week ended September 23rd.
At a conference yesterday Bank of England governor Mark Carney lectured Theresa May, telling the UK prime minister that her plans for Brexit would lead to weaker real income growth and there was nothing the central bank could do to mitigate the pain.With Mrs May sitting directly in front of him Carney said the central bank could only smooth the economic cycle rather than boost prosperity.
“It cannot deliver lasting prosperity and it cannot solve broader societal challenges,” Carney said. “Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU.”
Carney re-iterated the Bank’s view that Brexit will inflict damage on the UK economy in the medium term by making it harder to trade with the rest of the EU. Since Brexit our growth has fallen sharply from the 0.7 per cent rate at the end of 2016 to just 0.3 per cent in the second quarter of 2017, the slowest in the G7 economies.
09:30 - GBP - Current account is forecast at -15.8bn
15:00 - GBP - BOE Governor Mark Carney deliver closing remarks at the Bank of England's conference celebrating 20 years of independence.