At the end of a fairly busy week for corporate news, Friday’s results diary is almost bare, with just a handful of small-cap numbers on the agenda.
The main focus for traders then will be on UK macroeconomic factors, with the first reading for second-quarter GDP due at 9.30am.
Expectations are that economic growth during the period will have been higher than in the first quarter where severe weather conditions had their part to play.
Laith Khalaf, senior analyst at Hargreaves Lansdown expects second-quarter GDP to rebound to 0.4% after measly 0.2% growth was recorded in the first quarter, after the ‘Beast from the East’ shut down much of the country for a few days in February and March.
He said: “The second quarter was altogether brighter, with good weather, a Royal Wedding and the World Cup all driving consumer behaviour. The latest ONS retail sales data suggests that food and drink sales have been positively impacted by the sunshine and the football, while spending in pubs also increased by 9.5% year on year in June according to Barclaycard’s consumer analysis.”
Instant egg otherwise for BoE
But, the analyst added, if tomorrow’s growth number proves disappointing, “the Bank of England could find some pretty instant egg on its face after its decision to raise interest rates last week.”
The Bank of England expects GDP growth to average just 1.75% in the next three years, and Khalaf said that means a very slow tightening of monetary policy, assuming no economic shocks.
Aside from the GDP numbers, UK industrial and manufacturing production data are also due out on Friday, with both expected to jump by 1.9% year-on-year during June, possibly partly supported by a weaker sterling.
However, UK construction activity is expected to once again lag behind and possibly fall by 0.5% while housebuilding activity moderates.
Significant events expected on Friday August 10:
Trading update: Volution Group (LON:FAN)
Economic data: UK Q2 GDP; UK industrial, manufacturing production; UK construction output; UK balance of trade