UK GDP Beats as US PPI Data Looms

UK GDP beats expectations as US PPI data and jobless claims take centre stage in Thursday’s American session.

The UK GDP report served as the sole meaningful release of the European session, delivering a stronger-than-expected reading for June. The monthly estimate beat forecasts by a considerable margin, driven primarily by a robust performance from the services sector. The result points to continued resilience in the UK economy, though it does little to shift the Bank of England’s policy outlook. The central bank continues to favour holding rates steady unless a clear and sustained resurgence in inflation emerges to justify a policy adjustment.

UK GDP Beats as US PPI Data Looms

Elsewhere in the European session, the agenda remains light. Final Spanish CPI and Eurozone industrial production figures are due, though both carry low market-moving potential. Neither release is likely to influence ECB policy expectations in any meaningful way, and traders will probably look past the data without significant reaction.

The American session brings the US Producer Price Index and weekly Jobless Claims as the primary data points. Analysts expect headline PPI to come in at 4.9% year-over-year, easing from the prior reading of 5.5%, while the monthly measure looks set to post a 0.2% gain after a prior decline of 0.3%. Core PPI is forecast at 4.1% year-over-year against a prior 4.7%, with the monthly figure seen ticking up to 0.3% from 0.2%.

At this stage, the PPI data carries more relevance for PCE calculations than for shaping near-term rate expectations directly. September rate hike probabilities already fell to 35% following yesterday’s US CPI report, leaving the PPI unlikely to move that needle significantly on its own.

On the labour market front, Initial Claims are expected at 202K, up modestly from the prior 199K, while Continuing Claims are forecast to ease to 1,794K from 1,801K. Given the Federal Reserve’s current focus on inflation rather than employment, the claims data is unlikely to generate a strong market reaction. Attention instead remains firmly on any developments surrounding the US-Iran stalemate and the potential reopening of the Strait of Hormuz, which continues to act as an underlying driver of broader market sentiment.

Central Bank Speakers

Two Federal Reserve officials take the podium Thursday. Hawkish voter Fed’s Hammack speaks first at 12:15 GMT, followed by neutral non-voter Fed’s Barkin at 12:40 GMT. With rate hike probabilities in flux following recent inflation data, any commentary from Hammack in particular on the inflation outlook or the September decision will attract close attention from traders seeking fresh policy signals.

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