Revised GDP…

The actual seriousness of the UK recession
will be exposed later when the Office for National Statistics (ONS) issues its
revised numbers for Q2 this year. Investors and industry are expecting the
second reading of second-quarter gross domestic product (GDP). This figures
last month suggested the economy had contracted by 0.7% – a much harsher dip
than expected. There are signs those statistics might have been too
pessimistic, with some experts forecasting an adjustment to 0.5%. That 0.7%
contraction figure, published last month, was received with some cynicism by a
number of industry experts who claimed they had seen little sign of such a grim
economic downturn.  It also seemed to be
at odds with the unemployment rate which continues to fall. The first set of
figures from the ONS suggested that weak output figures in the industrial and
construction sectors had been emphasised bythe Jubilee celebrations during that
period. Since however, reviewed ONS statistics for the construction industry
now show that although output fell in the second quarter, the drop was less
than expected.

Over to Europe and Greek PM Antonis Samaras
will meet German Chancellor Angela Merkel later today he seeks more time for
Greece to make spending cuts. His journey will not stop there as he then
travels to France on Saturday for talks with President Francois Hollande. The
French and German leaders met on Thursday to debate Greece and advised Athens
to maintain the tough measures set by the Troika. Greece’s on-going access to
the bailout packages depends on a favourable report from the trio when they
meet next month. The country is presently trying to complete a package of
€11.5bn of spending cuts over the next two years. Coupled with this, it is also
being asked to put in place economic and structural reforms, including changes
to the labour market and a renewed privatisation drive. Look for this story to
dominate the Euro’s progress today which currently trades at 1.2540 against the
Greenback.

As we look ahead to this final trading day
before the UK bank holiday, as mentioned above we have the UK GDP
revision at 9.30am this morning.  For the
afternoon session we have Durable Goods Orders from the US which we are
expecting a figure of 2.5% for the month of August. The number indicates the
value of orders places for relatively long lasting goods i.e. longer than 3
years. As these are normally large investments a strong figure normally
suggests a sense of optimism in the US economy. This will be the driver for
cable volatility later and currently trades at 1.5841.

Report by Philip Ryan