GDP figures keep MPC on track, Brexit plan softened

May’s GDP figures this week confirmed that the economy is starting to regain some momentum. That said, growth was still pretty anaemic, raising the possibility that the Monetary Policy Committee could back away from raising interest rates in August. But given the strength of the business surveys, the Committee should be confident that quarterly growth will meet its 0.4% forecast in Q2, paving the way for it to press ahead. Meanwhile, the Government published details of its new Brexit policy, which would see the UK maintain a close trading relationship with the EU for goods. But the resultant boost to the pound was kept in check by the possibility of pro-Brexit Conservative MPs blocking such a deal.