French GDP data released yesterday does not bode well for the euro ahead of the wider eurozone GDP estimate. After 0.6 per cent q/q growth in Q1, France’s output sank to zero per cent in Q2 and below the 0.2 per cent GDP expansion expected. Worth noting this drop came in the period before Brexit. Expectations were that the data would show eurozone GDP slipped to 0.3 per cent q/q in Q2 from growth of 0.6 per cent in Q1. The area’s latest inflation data also came out yesterday. But the more interesting and impactful release yesterday could be bank stress test results due out last night after European markets close.

Sterling

Typically UK consumer confidence data released by GFK does not dominate headlines but yesterday it did. Overnight, GFK’s latest consumer morale index for the month of July recorded its sharpest drop in more than 26 years following the shock of Brexit and uncertainty about the economy. The index dropped to -12 in July from -1 in June which is the biggest monthly fall since 1990 and another piece of data underlining bets of a UK interest rate cut on August 4. The report follows last week’s UK services PMI survey which unexpectedly showed the biggest drop in 20 years.

US dollar

Ahead of the US GDP first estimate for Q2 at yesterday, traders saw an 18 per cent probability of the US raising interest rates in September. If the data is robust as expected, and next week’s US non-farm payrolls jobs report also beats expectations, then this rate hike probability will rise and impact the USD. Expectations are data would show the US economy grew by 2.6 per cent on an annual basis in Q2, marking a sharp rebound higher from the 1.1 per cent increase in Q1. Importantly, the data should show US consumer spending drove the number higher. A number of US economic reports in recent weeks, from jobs growth to industrial output, have beaten market expectations.

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