UK Q2 GDP second reading a mixed bag

So, GDP was just released, my prior note pretty much summed up what we expect and why we think

So, GDP was just released, my prior note pretty much summed up what we expect and why we think the Tory Party conference could be the biggest driver of the pound this Autumn. 

The highlights were stronger than expected investment data and stronger services. Government spending was stronger than expected at 0.6% on the quarter compared to 0.3% expected. Another disappointment was exports, it missed the 1% expected, and exports only expanded by 0.7% last quarter. This is likely to leave investors concerned that the UK export sector may never be able to benefit from nothing to GDP last quarter. Business investment was flat, however capital investment was stronger than expected. One would expect business to be cautious ahead of the Brexit negotiations, however, the fact that capital investment (ie, building things) is stronger than expected is good news, and suggests that some investors are willing to look through Brexit to our future outside of the EU. 

The pound has reversed earlier gains, suggesting that this report is not enough to boost sterling in any meaningful way. 

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