Daily Economic Outlook: 10th July, 2015

With market attention largely dominated by developments in Greece, the focus remains firmly on Sunday's EU leaders' summit. The gathering will be used by the leaders to decide upon their response to Greece's proposals. Against this backdrop, today's data is unlikely to stir much market interest, especially with the domestic data confined to relatively second-tier releases. However, these will provide some insight into the pace of UK GDP growth in Q2.

The better-than-expected May industrial production release earlier this week, suggested that the UK was on track for an acceleration in GDP growth in Q2. While in contrast the 0.8% drop in April construction output points to a tepid start to the quarter, with survey-based indicators for the sector such as the PMI and BoE Agents' scores remaining resilient, the near-term outlook for construction activity is considered to be remained positive, says Lloyds Bank. So for May, some acceleration in activity looks on the cards. A 0.7% rise in output, which would still put the sector on track to provide a positive contribution to GDP growth in Q2, estimates Lloyds Bank.

The sharp narrowing in the April trade deficit also indicates a positive contribution from net trade to UK GDP growth in Q2. However, given the volatility of the external trade data, this narrowing is unlikely to have been sustained in May and some deterioration in the trade balance is expected, adds lloyds Bank. 

In the US, the focus will be Fed Chair Yellen's speech which comes ahead of her semi-annual testimonies next week. Of particular interest will be her views on the risks to the US outlook from events in Greece and China.