The United Kingdom saw its economy grow in Q1 despite analysts expecting the economy to stall as inflation grew. The economy grew by 0.4% in Q1, 0.5% in the month of June and has grew by 3.5% in a year. The figures show a resilient UK economy that stays in the green despite an inflation that reached 9.1% in May and that is expected to reach 11% by the end of the year. Industrial production and manufacturing production also increased by 0.9% and 1.4% respectively while the trade balance deficit remains around $-21.45bn.
However, big changes are set to come for the British economy as the Tory leadership race saw 8 candidates remain in the race as they received 20 votes for fellow MPs. All had 12 min last night to convince their MPs why they should be the next leader of the party and Prime Minister, as they need at least 30 votes to move to the second round of voting, with the candidates with the fewest votes eliminated until just two candidates remain. The 8 candidates still in the race today are Kemi Badenoch, Suella Braverman, Jeremy Hunt, Penny Mordaunt, Rishi Sunak, Liz Truss, Tom Tugendhat and Nadhim Zahawi. To sum up the economical implication of the race, two favourites, Rishi Sunak and Liz Truss, have diverging views over the course of action take. Sunak wants a loosening of fiscal policy while Truss argues for unfunded tax cuts which could lead to more inflation and therefore a tightening of the monetary policy.
In Europe, yesterday was a historic day which saw the EURUSD pair reach a 20 year low of 0.9999 briefly, a first since the Euro was introduced in 2002. This morning, the downfall continues as Spanish inflation reaches 10.2% compared to last year in June and French CPI sees a 0.9% inflation increase in June despite being one of the least affected countries in the Eurozone by the energy crisis.
Cable remained stable yesterday. GBPUSD opened at 1.8886 and closed at 1.8885.
GBPEUR followed a similar trend. The pair opened at 1.1844 and closed at 1.1835.