UK gilts remain range-bound in muted trading ahead of Q2 GDP, June manufacturing production

The United Kingdom’s gilts remained range-bound during European session Thursday as investors wait to watch the country’s gross domestic product (GDP) for the second quarter of this year, which is expected to rise from its previous reading, due to be released on August 10 by 08:30GMT. Also, the manufacturing production for the month of June, due on the same day, will add further direction to the debt market.

The yield on the benchmark 10-year gilts, slid nearly 1 basis point to 1.30 percent, the super-long 30-year bond yields hovered around 1.75 percent and the yield on the short-term 2-year traded nearly 2-1/2 basis points higher at 0.75 percent by 09:30GMT.

The latest RICS residential market survey, released overnight, suggested that recent trends in the UK housing market have been maintained over the summer. But overall, not least given profound Brexit uncertainty, the picture looks to be one of market inertia. Indeed, with the survey’s index of new buyer enquiries little changed at just +2 percent and the index of new vendor instructions back down to zero, there unsurprisingly appears to be wariness on both the demand and supply sides of the market, according to the latest research report from Daiwa Capital Markets.

The end of the this week brings the latest GDP figures. Alongside the new monthly GDP data for June, which are expected to show a 0.2 percent m/m rise, the ONS will release the first estimate for Q2. Following a slowdown at the start of the year, GDP is set to have risen by 0.4 percent q/q in Q2, the report added.

Meanwhile, the FTSE 100 fell 0.49 percent to 7,738.25 by 09:35GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bearish at 1.06 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex