UK growth beats forecasts

A combination of good weather and the World Cup boosted retail sales and helped the UK economy grow faster than expected in July, with a month-on-month GDP increase of 0.3% topping estimates for a 0.2% rise. The pound is edging higher this morning, helped by the growth figures and trades not far from its highest level in a month against the Euro. The FTSE 100 is little changed on the day after a bad week last time out which saw the benchmark tumble to its lowest level since mid-April after posting its worst weekly performance in more than 5 months.

Economic growth solid but not spectacular

The most recent GDP figures are mildly pleasing with the latest rise in the ONS release indicating that the UK economy grew by 0.6% in the 3 months to July. These figures were broadly in line with the corresponding PMI data points and suggest that 3rd quarter growth likely top the 0.4% increase seen in Q2. This data does come with a bit of a lag however, but the PMI figures for August, released just last week, were ok overall and the general feeling remains one of solid but not spectacular growth. Brexit negotiations continue to be a major potential wildcard, and recent trade has seen a marked increase in sensitivity for the pound to remarks both for and against reaching a trade deal. Thursday sees the Bank of England announce the outcome of their latest policy decision which is widely expected to see no material change, with the accompanying statement the likely source of any market moves should they occur.

Debenhams shares plunge after KPMG called-in

There’s been another swoon in the share price of Debenhams this morning, with the stock dropping by as much as 17% after it emerged over the weekend that KPMG have been consulted on how to turn the struggling retailer around. The firm has lost two thirds of its market value in 2018 alone, as it issued 3 profit warnings and has announced a series of job cuts and it now appears to be seeking outside help in a bid to stop the rot. Debenhams has been a stalwart of the British high street for more than a century but its recent decline is in keeping with broader troubles for bricks and mortar retailers that have failed to adapt to the rise in ecommerce. These troubles are widely known and Debenhams has been one of the most widely shorted stocks on the LSE of late with more than 10% of the float currently believed to be out on loan to those betting on its share price to fall.