UK data out today demonstrates a slowdown in growth against expectations.
GBPUSD opened at 1.5568 only to fall to 1.5535 in the first hour of trading.
Business Investment (QoQ) (Q3) is down to a negative figure of -1.4%, against already poor expectations of 0.7% with previous at 3.2%
Business Investment (YoY) (Q3) was down to 5.2%, underachieving against the forecast of 7.0% and previous of 10.7%
Current Account (Q3) fell further to -27.0B, well below expectations of -21.9B and previous of -24.3B
GDP (YoY) (Q3) remained at 2.6% but did not achieve the expected figure of 3.0%
GDP (QoQ) (Q3) fell to 0.7% in line with the same forecast but down from previous of 0.8%
Though the markets should not be surprised at the figures following the governor of the Bank of England, Mark Carney’s address on UK financial stability on 16 December, just last week. The BOE was downbeat regarding the UK reaction to global risks, saying that, “The global economic outlook has weakened since the June 2014 Report and market concerns over persistent weak nominal growth and geopolitical risk have increased. These developments could affect the outlook for financial stability in the United Kingdom if concerns about persistent low growth lead to a sudden reappraisal of underlying vulnerabilities in highly indebted economies, or if a shift in global risk appetite triggers sharp adjustments in financial markets and undermines business and household confidence. The recent sharp fall in the oil price should support global and UK growth, but it also entails some risk to financial stability. Adjustments will be more disruptive if investors’ pricing of liquidity risk does not fully reflect structural changes in market liquidity. Such developments could lead to stress in funding markets for banks and corporates. In the Committee’s view, these global risks to the outlook for financial stability have increased since June.”
Ironically, the recent reprieve for oil prices has allowed European stocks to gain, as the FT reports, “European stock indices are higher during the last full session in the region ahead of the Christmas break, as investors take heart from sustained signs of resilience in the oil price.”
The UK100 [FTSE100] is up 0.3% and the France40 [CAC] is up 0.5%. Frankfurt’s Germany30 [Dax] is flat at the 9911 mark.
Brent oil continued to hold the $60 per barrel level and WTI rose slightly from $55 to $56 level.
MT4 chart: GBPUSD
MT4 chart: UK100
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