Pound's Growth Beat May Be Short-Lived as Manufacturing Output Falls

The British Pound has seen a growth beat in June's GDP numbers, but its momentum may be short-lived. The quarterly rate of growth matched expectations at 0.4%, while services carried the advance due to a temporary ceasefire in the Gulf, favorable weather, and the start of the World Cup.

However, manufacturing output fell 0.5% against a decline of only 0.2% expected, indicating a mixed economic picture for Britain. The growth print's strongest component was underwritten by the truce that broke in July, leaving some question about its sustainability.

The Pound has held steady near 1.3500, with its rise mainly driven by the Dollar's soft inflation print rather than any strength of its own. Rate futures now put a September Fed hike at 34.8%, down from 65% just last month, indicating that market expectations for a rate increase are waning.

Next week will bring key domestic data releases, including Labour market figures and July inflation numbers, which could impact the Pound's direction. With three of nine Bank of England members already preferring a higher interest rate, the September 17 decision is shaping up to be a crucial test for Sterling.