At 8:30am, on Friday September 29th, the UK’s official statistics body the ONS, will release the country’s latest (final) Q2 GDP figure. The expectation is for no change; both the QoQ figure is forecast to remain at 0.3% for Q2 and the annualised figure is expected to remain at 1.7%. Investors will be monitoring the release carefully for signs of any structural weakness in the UK’s economy, particularly in relation to Brexit, as should the figure come in ahead of forecast, then analysts may judge the E.U. exit is having a benign effect on economic health.
If the GDP figure beats the forecast then it would be a reasonable expectation for sterling to rise, versus its major peers. However, analysts and investors may judge that, even if the first two quarters of 2017 add up to a combined 0.5%, with a projected annual growth of 1%, the UK’s GDP growth is effectively halved versus 2017’s comparison. And if the latest quarter figure is a shock, perhaps 0.1%-0.2%, then a negative growth quarter for perhaps Q4 or Q1 2018, could be on the horizon. Curiously, if GDP falls significantly, it may force the BoE to shelve any thoughts of the base rate rises it suggested were imminent earlier in September.
At 9:00 am on Friday, the official stats agency of the Eurozone, releases its latest data on CPI; consumer price inflation. The expectation is for a rise to 1.6% in September, from the 1.5% figure reported in August and the 1.3% recorded in June. Coming the month before Mario Draghi made a commitment; to begin tapering of the €60b a month asset purchase scheme, this figure will be closely monitored given the ECB have continually stressed increased inflation will be used as a barometer to test the pressure in the economy, to gauge if its strong enough to weather the tapering and thereafter a rise in the interest rate for the single currency bloc, from its current flat rate of 0.00%. Should the latest inflation figure beat expectation then the euro may rise versus its major peers, as analysts will deduce that the ECB has no excuse to row back on its tapering commitment. Should inflation miss the forecast by only 0.1%, euro speculators may judge that such a small miss, will not effect the commitment of the ECB significantly.
UK relevant economic data
• GDP Q1 0.2%
• Unemployment 4.3%
• Inflation 2.9%
• Wage growth 2.1%
• Govt debt v GDP 89.3%
• Interest rate 0.25%
• Private debt v GDP 231%
• Services PMI 53.2
• Retail sales 2.4%
• Personal savings 1.7%
Eurozone relevant economic data
• GDP (annualised) 2.3%
• Unemployment 9.1%
• Inflation 1.5%
• Interest rate 0.00%
• Debt v GDP 89.2%
• Composite PMI 56.7
• Retail sales 2.6%
• Household debt v GDP 58.5%
• Savings rate 12.31%
• Wage growth 2%
