China has just released its Q2 GDP, which showed slower growth than expected. Potentially due to higher raw material costs, Delta variant threats, and tepid manufacturing activity, GDP expanded 7.9% on a YoY basis, missing the forecast at 8.1%. Compared with the record-high growth in Q1 at 18.3%, economic activity showed a clear slowdown. The unemployment rate was unchanged at 5%. However, local stocks and currency have shown resilience, with CNYUSD still advancing 0.14% to 0.1548, probably also due to USD’s weakness.
In the UK, inflation has surpassed expectations. June CPI rose to 2.5% from 2.1% in May, versus the expectation at 2.2%. The increase was the largest since 2018. Moreover, fuel prices notably rose by 20%, which was the largest jump since 2010. GBPUSD rose sharply after the announcement, regaining most of yesterday’s losses. Currently, inflation grows above BoE’s target. For the next step, we will see how central bankers would respond to it.