UK gilts surge post Q1 GDP data; investors await June manufacturing PMI

The UK gilts surged Friday after reading the country’s first-quarter gross domestic product (GDP), which remained unchanged, released today. Also, the country’s manufacturing PMI for the month of June, due by early next week will add more clarity to the debt market.

The yield on the benchmark 10-year gilts, slumped 2-1/2 basis points to 1.22 percent, the super-long 30-year bond yields plunged 2 basis points to 1.84 percent and the yield on the short-term 2-year also traded 2 basis points lower at 0.34 percent by 10:10 GMT.

The third estimate of gross domestic product from the Office for National Statistics confirmed that the economy grew by a meagre 0.2 percent in the first three months of the year, down sharply from 0.7 percent in the final quarter of last year.

"The squeeze on household spending is no surprise, given recent weak wage growth and rising inflation. The squeeze may well continue through the rest of the year, as inflation looks set to rise further. The big question is whether other parts of the economy can take up the slack from squeezed households," said Chris Williamson, Chief Business Economist at HIS Markit.

Meanwhile, the FTSE 100 traded 0.23 percent higher at 7,367.50 by 11:10 GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 38.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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