On Thursday February 22nd, at 9:30am U.K. (GMT) time, the U.K.’s official statistics agency, the ONS will publish the latest GDP readings. Both the quarter on quarter and year on year gross domestic product readings will be released. The forecasts, obtained by the leading news agencies Bloomberg and Reuters, through polling their panels of economists, suggests a quarter on quarter growth figure of 0.5% and a year on year figure of 1.5%. These readings would maintain the figures published for the previous month.
Investors and analysts will be monitoring this publication of GDP metrics closely for two main reasons. Firstly, if the forecast misses the prediction it could be a sign that structural weakness is developing in the U.K. economy, as the country is now closing in on a calendar year, before exiting the E.U. in March 2019. Secondly, if the GDP figure comes in at, or beats the forecast, then traders and analysts may draw the conclusion that (so far) the U.K. is weathering the storm of the Brexit referendum decision.
The U.K. pound is likely to experience increased activity before, during and after the release of both the QoQ and YoY figure. The standard fundamental analysis theory would suggest that if the forecasts are beaten then sterling may rise versus its peers, the opposite if the forecasts are missed. However, given that analysts may factor in inflation concerns and the lingering influence of Brexit, sterling may not react in an orthodox manner. Therefore traders of the U.K. pound would be advised to monitor their positions and risk accordingly to account for any reaction.
A SNAPSHOT OF RELEVANT ECONOMIC INDICATORS.
• GDP YoY 1.5%
• GDP QoQ 0.5%.
• INFLATION 3%.
• INTEREST RATE 0.5%.
• UNEMPLOYMENT 4.3%.
• WAGE GROWTH 2.5%.
• PMI SERVICES 53.
• GOVT DEBT V GDP 89.3%.
