UK: Growth slowdown in Q4 and it could get worse  - NBF

According to National Bank of Canada analysts, recent growth numbers from the United Kingdom reflect a slowdown in the economy and they warn it could get worse. 

Key Quotes:

“The spotlight is set to shine bright on the UK over the coming weeks. With less than 50 days left until the Brexit leave date, all eyes remain on Prime Minister May and her quest to negotiate a revised deal that can command sufficient support in Parliament. Recent weak GDP growth data further cloud an already grim picture for the world’s 5th largest economy, prompting dovish comments from the BOE, as the sterling continues to struggle amid the Brexit fog.”

“December’s monthly setback implies very poor momentum heading into Q1. The dominant service sector was the only positive contributor of quarterly GDP growth at 0.35%. On a year-on-year basis, the economy grew 1.3% in the fourth quarter, but below expectations for a reading of 1.4%, and the lowest since 2012. The sterling turned softer following the release of the numbers, with the GBP/USD dropping as low as 1.2855. Inflation numbers also came in weaker than expected at 1.8%,
falling below the BOE’s 2% target.”

“The possibility of extending Article 50 (i.e., kicking the Brexit can down the road) is a distinct one in our view, which could push the BOE to delay its next rate hike.”

“There’s no way around it, the latest slate of UK GDP numbers reflects a slowdown in the economy—and it could get worse. In a worse case scenario, a hard/no-deal Brexit could very well force the BOE to contemplate rate cuts to lean against such an exceptional shock to the system. An extension of the Article 50 deadline would likely tie the central bank’s hands as it waited to evaluate market reaction/impact on the economy. Indeed, if May is to deliver a smooth Brexit (still the BOE’s base-case scenario) and much needed stability to the economy/sterling, it will require a swift level of compromise among UK lawmakers that we simply haven’t seen thus far.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: Bid in holiday-thinned trade, bullish channel breakdown confirmed

EUR/USD is mildly bid in Asia, but the gains could be short-lived, as yesterday’s sell-off seems to have put sellers in commanding position for the near term. 


GBP/USD battle around 1.3000 not looking good for bulls

An upward surprise in UK Retail Sales, fell short of boosting the Pound, hurt by Brexit uncertainty. Investors heading into a long weekend stocked in USDs.


USD/JPY: No reaction to BOJ’s decision to cut its routine buying of long-dated bonds

USD/JPY pair is currently trading at 111.93, having clocked a 112.00 earlier today. The Bank of Japan (BOJ) cut its purchases of bonds with maturities between 10 and 25 years to ¥160 billion, down ¥20 billion from the previous ¥180 billion. 


Data keeps markets moving ahead of Easter weekend

The pound dropped on Thursday despite impressive retail sales data that showed UK consumers defying Brexit uncertainties. Even as the UK was heading towards a no deal Brexit in March UK households were still spending at an impressive rate.

Read more

Gold Technical Analysis: Eyes corrective bounce on bullish 4H RSI divergence

Gold snapped its five-day winning streak with a 0.19 percent gain on Thursday, confirming a bullish divergence of the relative strength index on the 4-hour and hourly charts. 

Gold News