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Pound to Fall on Ebbing BOE Rate Hike Bets if 3Q UK GDP Underperforms

Pound to Fall on Ebbing BOE Rate Hike Bets if 3Q UK GDP Underperforms

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Pound to Fall on Ebbing BOE Rate Hike Outlook if 3Q GDP Underperforms
  • Yen Rose and Aussie Dollar Fell in Asia, Mirroring Slide in S&P 500 Futures
  • Place Economic Releases Directly on Your Charts with the DailyFX News App

Third-quarter UK GDP figures headline the economic calendar in European trading hours. A slowdown is expected, with output rising 0.7 percent in the three months through September compared with 0.9 percent in the prior period. UK news-flow has aggressively deteriorated relative to consensus forecasts since mid-September, hinting analysts are overestimating the economy’s vigor and opening the door for a downside surprise. Such an outcome is likely weigh against Bank of England rate hike expectations, punishing the British Pound. Needless to say, an upside surprise stands to produce the opposite results.

The safety-linked Japanese Yen outperformed in overnight trade while the sentiment-sensitive Australian Dollar proved weakest on the session. The moves mirrored a drop in S&P 500 futures, which the newswires chalked up to reports of the first confirmed case of Ebola in New York. Reports claimed markets were unnerved by swelling contagion fears considering the metropolis is the most populous US city. We suspect the move may have limited follow-through however as investors withhold commitment to a directional bias ahead of next week’s heavy-duty event risk.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Trade Balance (NZ$) (SEP)

-1350M

-625M

-489M

21:45

NZD

Trade Balance YTD (NZ$) (SEP)

648M

1530M

1778M

21:45

NZD

Exports (NZ$) (SEP)

3.61B

3.50B

3.51B

21:45

NZD

Imports (NZ$) (SEP)

4.97B

4.20B

4.00B

1:30

CNY

China September Property Prices (SEP)

-

-

-

2:00

CNY

Conference Board Leading Index (SEP)

302.6

-

299.9

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German GfK Consumer Confidence (NOV)

8.0

8.3

Low

8:20

EUR

ECB's Praet Speaks in Milan

-

-

Low

8:30

GBP

Gross Domestic Product (QoQ) (3Q A)

0.7%

0.9%

High

8:30

GBP

Gross Domestic Product (YoY) (3Q A)

3.0%

3.2%

High

8:30

GBP

Index of Services (MoM) (AUG)

0.3%

0.3%

Low

8:30

GBP

Index of Services (3M/3M) (AUG)

0.9%

1.0%

Low

10:00

EUR

ECB Announces 3-year LTRO Repayment

-

-

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.2520

1.2583

1.2615

1.2646

1.2678

1.2709

1.2772

GBPUSD

1.5898

1.5963

1.5997

1.6028

1.6062

1.6093

1.6158

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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