The latest in our series of previews looks ahead to the UK Q4 GDP first reading out today at 09.30 GMT
This morning brings the first reading of UK Q4 GDP and most analysts expect the pace of qq GDP growth to come in slightly lower, with the median looking for 0.6%, down 0.1% from Q3. However, the pace of year-on-year growth is expected to jump by 0.2% to 2.8% in Q4.
The full final Q3 details can be found here and showed a final revision on yy down to 2.6% from 3.0% which understandably gave GBP a little slap
UK GDP YY
It is worth noting that the preliminary data is based on the output side of the economy and that 28% of GDP is export related, not one of our strengths so we shouldn’t expect too much of a shock to the upside. Adding to that bearish tone is the Dec Services PMI that came in well short at 55.8 ( the lowest reading since May 2013 ) vs 58.5 expected vs 58.6 prev. The services sector as we know makes up the largest share of GDP at 78%.
Today’s forecasts
UK Q4 GDP flash forecast 27 Jan
Other pointers include the UK NIESR which lowered its Dec GDP number to +0.6% from +0.7% while last week the UK Item Club think tank raised its forecast for 2015 GDP from 2.4% to 2.9% but the upward revision came with reservations
So the risk appears to be the topside if the negativea are factored in, and while GBPUSD is still hanging around at the lower end of recent ranges the pound overall has been performing rather decently albeit more by default after the SNB/ECB moves. A better GDP number today will find a few bulls more than happy to pile in initially but this bear still says the forthcoming UK elections and the global uncertainty generally means that GBP rallies remain sell opportunties
GBPUSD orders are on their way but we’ll be looking at key levels of 1.4950/80 – 1.5200 at the extremes with 1.5020-1.5120 on the closer touch, while EURGBP has 0.7400-0.7500 as the wider range before we can get too excited.
As ever look out for moves into the release to provide further clues.
