UK DATA: Q2 GDP Stronger-than-expected, But Private Details Weak
Q2 flash GDP at 0.3% Q/Q, above the 0.1% expected by analysts and the BOE. It’s a moderation from the 0.7% Q/Q seen in Q1, which was in part skewed higher by “international tariff or domestic tax-related front-loading”, according to the BOE. The print was worth just 0.1% of upside in cable, with the BOE more focused on labour market and inflation outturns for its policy outlook.
- The details of the Q2 reading appear soft though. In particular, private consumption rose just 0.1% Q/Q (vs 0.2% cons and 0.4% prior), while total business investment fell a notable 4.0% Q/Q (vs 0.3% cons, 3.9% prior).
- Instead, Government spending was higher-than-expected at 1.2% Q/Q (vs 0.8% cons, -0.4% prior). A reminder that the Chancellor’s Autumn budget, where another round of fiscal tightening is anticipated, will likely centre on tax (rather than spending) reforms.
- Export growth was strong again at 1.6% Q/Q (vs 0,1% cons, 3.3% prior), while imports rose 1.4% Q/Q (vs 0.5% cons, 2.0% prior).
- Briefly looking at the monthly data for June, GDP rose 0.4% M/M (vs 0.2% cons), with industrial production and services production slightly stronger than expected.
- The BOE expects real GDP growth at 0.3% Q/Q in Q3.
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Historical bullets
GILT TECHS: (U5) Bear Threat Still Present
- RES 4: 93.00 Round number resistance
- RES 3: 92.79 High Jul 4
- RES 2: 92.29 20-day EMA
- RES 1: 92.19 High Jul 10
- PRICE: 91.83 @ Close Jul 14
- SUP 1: 91.42 Low Jul 8
- SUP 2: 91.16 Low Feb 2
- SUP 3: 90.97 76.4% retracement of the May 22 - Jul 1 bull leg
- SUP 4: 90.59 Low May 29
A bear cycle in Gilt futures remains in play and last week’s sell-off reinforces this theme. The contract has breached support at 91.63, the Jul 2 low. Price has also pierced 91.50, the 61.8% retracement of the May 22 - Jul 1 bull leg. The move down exposes 90.97, the 76.4% retracement point. Clearance of this level would strengthen a bearish theme. On the upside, initial firm resistance is at 92.29, the 20-day EMA.
USDJPY TECHS: Approaching Resistance
- RES 4: 149.28 High Apr 3
- RES 3: 148.65 High May 12 and a reversal trigger
- RES 2: 148.03 High Jun 23
- RES 1: 147.89 Intraday high
- PRICE: 147.61 @ 07:01 BST Jul 15
- SUP 1: 146.14 Low Jul 11
- SUP 2: 145.30 50-day EMA
- SUP 3: 144.23/142.68 Low Jul 7 / 1
- SUP 4: 142.12 Low May 27 and a key short-term support
A short-term bull cycle in USDJPY remains intact. Price is approaching the next important resistance, at 148.03, the Jun 23 high. Clearance of this hurdle would strengthen the bullish theme and expose key resistance at 148.65, the May 12 high. On the downside, support to watch is 145.20, the 50-day EMA. A clear breach of the average would be bearish and highlight a possible reversal.
EUROSTOXX50 TECHS: (U5) Pullback Appears Corrective
- RES 4: 5575.00 High Mar 3 and a major resistance (cont)
- RES 3: 5526.00 High Mar 19 / 20 (cont)
- RES 2: 5500.00 Round number resistance
- RES 1: 5486.00/88.00 High May 20 and a bull trigger / High Jul 10
- PRICE: 5403.00 @ 06:39 BST Jul 15
- SUP 1: 5331.07 50-day EMA
- SUP 2: 5281.00/5194.00 Low Jul 1 & 4 / Low Jun 23 and bear trigger
- SUP 3: 5138.00 High Apr 30
- SUP 4: 5078.00 Low Apr 30
A bull cycle in Eurostoxx 50 futures remains in play and the latest pullback appears corrective. Recent gains have exposed key resistance and the bull trigger at 5486.00, the May 20 high. It has been pierced, a clear break of it would confirm a resumption of the medium-term bull cycle that began Apr 7 and open the 5500.00 handle. Support to watch lies at 5281.00, the low on Jul 1 and 4.
