Sterling tumbles on disappointing GDP
The final reading of Q1 GDP confirmed the UK avoided slipping back into recession as growth was confirmed at 0.3% quarter-on-quarter. However, the detail of the report revealed real disposable incomes fell by 1.7% q-o-q, the largest quarterly fall since Q1 1987, this was offset by a significant drop in the household savings rate. While the data confirms the UK grew during the quarter, the recovery could run out of steam as falling incomes cannot be offset by lower savings indefinitely.
In the Eurozone, the German labour market continued to improve as unemployment fell by 12,000 in June, the first improvement after three monthly increases. The unemployment rate remained at the multi-year low of 6.8%. This release suggests conditions remain favourable and are likely to support consumer demand in the coming months.