Macro

UK: The UK’s gross domestic product (GDP) expanded by 0.5% sequentially in June, surpassing the expected 0.2% growth, driven by notable increases in manufacturing and construction activities. The second-quarter GDP also exceeded expectations, growing by 0.2% compared to the previous three months, aided by stronger-than-anticipated private consumption. Business investment displayed robust growth, contrary to predictions of a slight contraction. However, the Halifax mortgage lender’s house price index decreased for the fourth consecutive month in July, with a 0.3% sequential decline.

EU: In its latest Economic Bulletin, the European Central Bank (ECB) noted that developments following the June interest rate hike support the expectation of inflation moderation in 2023, although it is likely to remain above the 2% target for an extended period. The report indicated a near-term deterioration in the euro area’s economic outlook due to weaker domestic demand. Despite this, the ECB acknowledged the high uncertainty surrounding both inflation and economic growth prospects. These comments heightened expectations that monetary tightening could be temporarily paused in September.

US: The week’s economic agenda featured notable inflation data. Early in the week, stocks surged as the Labor Department’s consumer price index (CPI) revealed a 0.2% increase in July, contributing to a 3.2% year-over-year rise, just below expectations. Nevertheless, this initial enthusiasm waned throughout the day, and stock performance was mixed after news broke that producer prices had risen by 0.3% for the month, slightly surpassing forecasts. The annual increase in producer price inflation, at 0.8%, marked the first rise in over a year, although it remains notably below the Federal Reserve’s 2% target. Additionally, Federal Reserve officials provided a somewhat varied outlook on inflation, with different opinions on the pace of rate hikes and potential cuts.