UK GDP shows no growth in February

The US dollar recovers slightly, Focus on Retail Sales

By Nadia Elbilassy | @Nadia Elbilassy | 5 July 2023

Midday Market update
  • European stocks continue upward momentum, FTSE up to $7877

  • UK GDP grows 0.0% down from 0.4%, in UK global turmoil

  • US Retail sales are expected to stay the same as previous at -0.4%

The sterling under pressure

The pound sterling has seen a decrease in its value compared to the US dollar today, following its strong gains from the previous day. It is currently hovering around the 1.25 level.

Yesterday's economic data showed that the British economy's growth showed no growth in February at 0.0% vs expectations of 0.1% growth and 0.4% in January. Industrial production also contracted as well to negative 0.2% vs previous of negative 0.5%.

Governor of the Bank of England, Andrew Bailey, reassured the public that there is no need to worry about a recurrence of the global financial crisis. He also stated that the Bank of England will consider financial conditions when making decisions and remains committed to lowering inflation to the targeted level of 2%.

Markets wait for Retail sales

The markets are awaiting US retail sales data on Friday during March. The US dollar suffered significant declines yesterday after a series of disappointing data, including producer prices and unemployment claims. Meanwhile, the markets are preparing for the Federal Reserve to begin reducing the pace of monetary tightening starting in the second half of 2023.

However, since the beginning of today's trading, the US dollar has started to reduce some of its losses, as the dollar index has risen somewhat to settle now near levels of 100.90.

The rise of the US dollar has caused pressure on some major currencies, as the dollar-yen has risen again to levels of 132.50, while the euro-dollar has declined to levels of 1.1050.

European stocks continue rising

European stocks continued their gains on Friday, as US economic data boosted investors' hopes that local interest rates will peak in the coming months.

The Stoxx 600 index rose by 0.3%, while the German Dax index rose by 0.3%, and the British FTSE 100 index rose by 0.2%. The French CAC 40 index rose to a record high of 0.2%.

This comes after recent data indicated an increase in industrial production as global supply chain problems recede and companies compensate for accumulated orders.