IMF: UK economic growth to reach 2.9% in 2014

UK

UK manufacturing output grew by 1% in February from January, the Office for National Statistics (ONS) has said. The rise - driven by pharmaceuticals, transport equipment, food, beverages and tobacco, - was the biggest since September, and ahead of forecasts. The year-on-year figure saw output 3.8% higher than in the same month of 2013. Industrial production also came out much better than expected yesterday currently reading at 2.7% when it was expected to come in at 2.2%.

The International Monetary Fund (IMF) says the UK economy will be the fastest-growing in the G7 this year. It says the UK will grow 2.9% in 2014, up from a January estimate of 2.4%, and will see growth of 2.5% in 2015. The stronger-than-expected output figures and expected positive UK Growth figures pushed up the value of the pound yesterday, as markets speculated on an early interest rate rise by the Bank of England.

Sterling jumped by 0.6% against the dollar to $1.6713 and by 0.5% against the euro to 1.2144 euros.

EUR

There was no data out of Europe yesterday as all eyes was on this morning’s trade balance coming out of Germany. The consensus was predicting €17.8B but the actually reading was slightly disappointing coming in at €15.7B. The exports figures released aggressively missed expectations of-0.5% reading at -1.3% for February while imports were in the green reading at 0.4% which was a 0.3% improvement to last month. This did not affect the position of the Euro this morning as the above data was medium impact. EURUSD is trading at resistance levels of 1.3782 this morning while the pair is now being supported at 1.3675.

Tomorrow The European Central Bank publishes a monthly report that contains a detailed analysis of the prevailing economic situation and the risks to price stability. It also provides articles on a wide range of topics related to the tasks of the ECB. A high reading anticipates a hawkish attitude which will be positive, or bullish, for the EUR, while a low reading is seen as negative, or bearish.

US

It was very quiet day from the economic calendar in the US yesterday as we had no data released. Nevertheless, from 12pm (UK time) today we will see medium impact data coming out in MBA mortgage applications, wholesale inventories and the ten year note auction which are all expected to achieve their consensus figures.

Later this evening we have the FOMC minutes which has potential to create volatility overnight in the Asian trading session as this meeting determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.