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UK GDP falls by more than expected.

UK GDP falls by more than expected.

UK Q2 GDP came in at -0.7% rather than -0.2% – this has really knocked GBP of its perch with GBP/EUR falling to 1.2755 and GBP/USD falling to 1.5460 within seconds of the release.

Whilst this is very negative news for the UK the affect on GBP is likely to be short lived as the Eurozone issues still dwarf the UK’s growth concerns

The negative news flows for the eurozone showed little respite yesterday as the international credit ratings agency, Moody’s, downgraded the outlook for Germany,Luxembourg and the Netherlands to negative watch. The move means three of the most stable economies in the eurozone could see their AAA credit ratings under threat.Moody’s cited that all three nations were susceptible to the effects of a possible Greek exit from the eurozone and the need to provide bailouts for Spain and Italy.

A glimmer of positive news for the global economy came from the Chinese manufacturing data best reading in five months and suggests China’s policy easing is starting to work.

EUR/USD hit a low of $1.2040 yesterday. Later tonight the Reserve Bank of New Zealand will make it’s interest rate decision which is expected to be no change at 2.5%.

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