Tomorrow the Office of National Statistics announces the second reading of the UK GDP second quarter.Market expectationsThe first reading showed a growth of 1.1%, almost twice as fast as the market had expected.The general consensus for the second reading is for no change. However, with strong headwinds facing the UK economy, traders will be keeping an eye on the second reading, particularly if there is any deviation from market expectations.There is no doubt that recent weak economic data from the UK and important trading partners the US and EU has raised investor concerns over the potential for a double dip recession.Indeed only recently Mervyn King, the BoE governor, said that “business and consumer sentiment have shown signs of softening…and there is great uncertainty about the outlook for both the US and our most important trading partner, the euro area.”¹ (source: Market Watch 11/08/10)There could however be some optimism that the second reading of Q2 GDP may be revised up considering the recent data concerning construction activity grew 8.6% last quarter, much higher than the 6.6% expected.A stronger than expected reading could boost hopes that Britain will escape a double dip recession, whilst a weaker second reading could escalate fears and force traders to seek defensive asset classes.
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