GBP/USD Flat Ahead of UK Q2 GDP

The GBP/USD pair is relatively flat around 1.2140 ahead of the UK Q2 GDP report.

Moreover, there is growing concern that Boris Johnson, the UK Prime Minister will announce for a general election soon after Brexit; thus creating unrest in the opposition.

Separately, the escalating trade tension between the US and China is creating instability in the global market following spread between the 10-year and 2-year US Treasury yields heading towards an inversion.

Today, investors will wait for the report of the UK's second quarter (Q2) Gross Domestic Product (GDP) along with other economic indicators such Industrial Production data, monthly GDP data, Manufacturing Production data and Goods Trade Balance.

Few Insights:

  • GDP is expected to drop from 0.5% to 0.0% on a QoQ basis.
  • YoY might dip to 1.4% from 1.8% earlier.
  • MoM data is likely to fall from 0.3% to 0.1%.
  • Manufacturing Production can decline 1.1% from no previous 0.0% on a yearly format.
  • Industrial Production can weaken to 0.2% from the previous expansion of 0.9%.
  • Goods Trade Balance also bears consensus of high deficit figure of £-11.800B compared to prior £-11.524B.

Gold Prices Set to Record Best Week Since 2016

Gold prices are on the rise again on Friday despite the ongoing trade war between the US and China.

Early this morning, Gold futures for December delivery rose by 0.5% to $1,518.25 per troy ounce on the Comex division of the New York Mercantile Exchange.

Gold started to gain in value this week following China’s response to the US as they devalued the yuan against the US dollar.

Consequently, gold is now having its best week since April 2016.

In addition, there is growing assumptions that the US Federal Reserve will cut rates again if the conflict between the US and China worsens.

Therefore, this has also contributed to sending gold on a bullish run that made it rose by about 15% until now.

China’s CPI Rises Slightly Faster Than Expected

According to the National Bureau of Statistics of China (NBS), consumer price index (CPI) in July was slightly higher than market expectations.

It rose to 2.8% from the previous year, 2.7%. This is the highest figure since February 2018.

According to the director of the NBS, Dong Yaxiu, the prices of fresh fruit and pork led to that high CPI data.

Prices of fresh fruits rose by 39.1% while pork jumped by 27% from last year.

In addition, the producer price index (PPI) dropped by 0.3% from last year during the month, according to the NBS.

Financial Events to watch for today

08:30 GMT
GDP (QoQ) (Q2), GDP (YoY) (Q2) [UK]
08:30 GMT
GDP (MoM), Manufacturing Production (MoM) (Jun) [UK]
12:30 GMT
PPI (MoM) (Jul) [US]