UK Growth Easing Confirmed

The UK economy slowed to 0.4% in the first quarter of the year, from  0.6% in the final quarter of last year, revealed the second estimate on the growth figures from the Office of National Statistics.

The estimate matched the first set of data on growth from January to March.
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And it thought by many analysts that a possible exit from the European Union (EU)is having a massive bearing on the current state of the UK economy, as uncertainly and feat over the outcome of the vote grows.

Recent polls have shown that the ‘remain’ campaign is still ahead, while the leave campaign appears to be losing support.

What traders might be wary of, is that the number of British voters who don’t know how they will vote is increasing.

The second estimate on first quarter growth, also disclosed that business investment fell by 0.5%, but capital formation growth, the net additions of stock such as buildings and equipment, rose by the same amount.

Societe Generale Highlight  EU Referendum Effect

Investment bank Societe Generale in their daily report, have said that more pre-referendum hedges are being closed than they imagined was possible.

And GBP/USD is bearing down on the May 3 high at 1.4770, which coincides with the 200-day average of that exchange rate.

‘Brexit’ hedges are being put on in other forex pairs the bank opined, for example buying CHF/NOK, looking for sideways trading on a ‘remain’, or in contrast a sharp rally on a risk-averse ‘leave’ outcome. 

Fitch Say Greek Liquidity Crises Averted

Fitch have said that the approval from the Eurogroup to present Greece with the 10.3 billion euro second trance of bailout funds, has reduced the risk of another liquidity crises.

The ratings agency has also said that the deal, will incentivise Greece to ensure that they meet the conditions required for the third bailout programme in the future.

There will be an initial payment of 7.5 billion euros from the European Stability Mechanism, which will cover the 3 billion euros in debt repayment owed to the International Monetary Fund (IMF), and the European Central Bank (ECB).

Greece’s creditors have also agreed to the possibility of prospective debt relief. The Eurogroup will review debt sustainability, with a view to keeping gross financing needs  “below 15% of GDP during the post programme period for the medium term, and below 20% of GDP thereafter.”

Fitch said that front loaded debt relief would be based on reducing interest rates on existing loans, and some smoothing of European Financial Stability Facility repayments.

Other significant medium term measures are likely to include payment of profits on Greek bonds held by the ECB, and partial early refinancing of IMF loans.

Spanish Economy Grows in 2016 First Quarter

The Spanish economy has registered a quarter on quarter increase of 0.8% in the first quarter of 2016, official figures has confirmed.

This rate is the same as the previous two quarters last year, and since the end of the second quarter of 2014, the Spanish economy has escalated at a brisk pace.

Year-on-year growth stands at 3.4%, compared with 3.5% registered in the previous quarter.

Despite the positive growth figures, unemployment is Spain has remained stubbornly high at 21% of the population from January to March this year, way higher than the 9.6% EU average.