– 4Q U.K. GDP to Expand Annualized 1.9%- Slowest Pace Since 1Q 2013.

 Will the Lackluster Recovery Push the BoE to Further Delay the Normalization Cycle?

Trading the News: U.K. Gross Domestic Product (GDP)

The U.K.’s Gross Domestic Product (GDP) report may heighten the bearish sentiment surround British Pound and fuel the near-term decline in GBP/USD should the data encourage the Bank of England (BoE) to further delay its normalization cycle.

 

What’s Expected:

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Why Is This Event Important:

Even though BoE officials sees a ‘solid’ recovery in the U.K. and talk down bets for additional monetary support, the downside risk surrounding the economic outlook may prompt the Monetary Policy Committee (MPC) to retain its current policy throughout 2016 as the central bank struggles to achieve the 2% target for inflation.

Expectations: Bearish Argument/Scenario

Release

Expected

Actual

Industrial Production (MoM) (DEC)

-0.1%

-1.1%

Manufacturing Production (MoM) (DEC)

0.1%

-0.2%

Net Consumer Credit (DEC)

1.3B

1.2B

Easing outputs accompanied by the slowdown in private-sector credit may drag on the U.K. growth rate, and signs of a slowing recovery may push the BoE to retain its current policy throughout 2016 especially as Governor Mark Carney appears to be in no rush to implement higher borrowing-costs.

 

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Retail Sales ex Auto Fuel (MoM) (JAN)

0.7%

2.3%

Average Weekly Earnings ex. Bonus (3MoY) (DEC)

1.8%

2.0%

Trade Balance (DEC)

-3.000B

-2.709B

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