European session review: GBP mixed after UK reported slightly-better-than-feared economic slump in Q2

GBP traded mixed against its major counterparts in the European session on Wednesday after the official data revealed that the UK's economy contracted slightly less than forecast in the second quarter. While the sterling rose against JPY and NZD, it weakened against the rest of major rivals.

The Office for National Statistics (ONS) reported that Britain's gross domestic product (GDP) tumbled 20.4 percent q/q in the second quarter, following a 2.2 percent q/q decline in the first quarter. This was the biggest fall since the records began in 1955. Economists had forecast a decline of 20.5 percent q/q. According to the report, private consumption accounted for more than 70 percent of the decline in the GDP, down by 23.1 percent q/q, while gross fixed capital formation and government consumption declined by 25.5 percent q/q and 14.0 percent q/q respectively. "It is clear that the UK is in the largest recession on record," the ONS noted. In y/y terms, the UK's GDP slumped 21.7 percent in the second quarter, recording its biggest fall since comparable records began in 1956. Economists had expected a 22.4 percent y/y plunge. 

June’s GDP data, meanwhile, showed signs of a recovery, as the UK economic growth accelerated to 8.7 percent m/m from 2.4 percent m/m in May. In y/y terms, Britain's economy contracted by 16.8 percent in June, following a revised 23.3 percent plunge in the previous month. Economists had forecast an 18.5 percent fall. This provided some support for the pound.