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November 2016

UK GDP holds key for Pound

Published: Friday 25 November 2016

  • German economy set for positive Q4 says IFO
  • UK GDP holds key for Pound
  • NZ trade gap narrows unexpectedly

When I flicked on my phone this morning (yes, I do turn it off overnight), there were already 12 emails with the words ‘Black Friday’ in them. Is it me, or does that smack of desperation amongst retailers? I haven’t even started to think about Christmas yet; it’s not even December. Please stop them.
 
In the markets, the respected IFO institute in Germany reported that the German economy had a quiet third quarter but is in good shape heading into Q4. That hasn’t done a great deal for the Euro, which is weaker against the Pound and US Dollar amongst others.
 
Overnight we heard that New Zealand’s October Trade Balance was much better than the markets had forecast and better than September’s numbers as well. The NZ Dollar improved a tad on the news, but the Sterling-NZD rate is stuck to the NZ$1.77 level with bungee cords and, whilst the Pound is looking a little overbought at this price, there doesn’t seem to be a reason to sell Sterling from here right now.
 
That could change with the release of the Q3 GDP data this morning. This is the second estimate of UK growth in the three months to September. The provisional figure was 2.3% on the year. Any improvement on that will boost the Pound and vice versa.  We will also get the CBI’s retail sector sales figure this morning. This is expected to be rather upbeat, so the Pound could have a very good day if all the data is in the positive zone.
 
The lack of US traders will make the afternoon session thinly traded and potentially volatile today. I hope our American readers enjoyed their Thanksgiving Day celebrations. I hope they gave thanks for the fact that Donald Trump has opted to take a salary of just $1. That will counteract some of the estimated $1 million a year it is going to cost in keeping him and his family safe in New York now that he has also decided not to live in the White House.
 
Have a great weekend everyone. 
 

Joke


A guy is lost in a small village. So he stops a passer-by and asks for the quickest way to London.
 
“Are ya walkin’ or drivin’?” says the local.
 
“I’m driving,” says the lost man.
 
“Yep. That’d be the quickest way.” says the local..

 

Today's Major Economic Releases
 

 
Market BST Data/Event Previous Expected
GBP 09:30 UK: GDP 2nd release, % q/q (y/y) 0.5 (2.3)P 0.5 (2.3)
GBP 09:30 UK: Private consumption, % q/q 0.9 0.8
GBP 09:30 UK: Gross Fixed Capital Formation, % q/q 1.6 -0.5
GBP 11:00 UK: CBI distributive trades, total sales 26 -
 
Daily Currency Analysis by David Johnson

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