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UK Growth growing faster than estimated

UK Growth growing faster than estimated

The U.K. economy fared a little better than expected in Q4’16, mainly due to manufacturing industry, but annual growth of 1.7% pushed the U.K. below Germany at the top of global growth tables. Thus in a single stroke, the Government’s favourite statistic was gone. The ONS revealed there had been a slowdown in business investment, which fell by 1% compared with the three months to the end of September. It attributes that to “subdued growth” in investment in information and communications technology equipment, as well as “other machinery and equipment”.

The GBPUSD pair continued struggling for direction this Wednesday, surging up to 1.2507 at the beginning of the day amid GBPEUR rising to yearly highs just below the 1.1900 barrier.

The Federal Open Market Committee (FOMC) minutes didn’t reveal much new information, as many involved already expressed their views since the meeting, not least Fed Chair Janet Yellen. Overall the committee thinks the economy continues to improve but that Trumpenomics make the outlook more uncertain. ‘Uncertain’ was mentioned 14 times in the minutes (versus 15 in December and just five in November).

NY FED governor Jerome Powell expects rate hikes to be gradual in the US. In respect of the growth outlook, Powell expects stable economic growth and sees inflation rising up to the 2% target over next couple of years and echoes recent Fed rhetoric.

The Euro sold off yesterday even after German IFO releases were strong. French centrist presidential candidate Francois Bayrou stood down and offered an alliance to independent candidate Emmanuel Macron, joining forces against far-right candidate Marine Le Pen. Much of the European session was taken up by the political concerns over Le Pen’s gains in the polls drawing more investors away from France and into the safety zone that is Germany.

This morning Germany released its Q4 GDP figures which showed that the economy grew by 0.4% in the three months to December, whilst YoY it came in at 1.2% as expected. The CFK consumer confidence survey for March printed 10.0 from previous 10.2.

Data to watch: 12pm US Treasury Secretary Mnuchin speech, Chicago Fed National Activity Index, Initial Jobless Claims. 2pm Housing Price Index. 6pm FOMC Member Kaplan speech.

 

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