UK GDP grew by 0.7% q/q, in line with market expectations

The UK GDP grew by 0.7% q/q, in line with market expectations. Not surprisingly, the services sector (78% of economy) was the main driver as it grew 0.7% q/q while IP expanded 1.0% q/q. In terms of policy implications, the Q2 growth number matches the BoE's projection so should not derail the view that come August, some of the more hawkish members will start voting for rate increases. 

OIS markets aren't pricing a full rate rise until April/May next year, so GBP has plenty of scope to rally if rates markets start moving towards an earlier hike by the MPC. 

"Our trade of the week is long GBP/JPY," says RBC Capital Markets.

It was also announced that GertJan Vlieghe will replace David Miles as the next external MPC member.