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British Pound Looks to UK GDP Data to Inform BOE Rate Hike Bets

British Pound Looks to UK GDP Data to Inform BOE Rate Hike Bets

Talking Points:

  • British Pound May Be More Responsive to Upbeat vs. Soft 3Q UK GDP Print
  • Yen Rose, Commodity Dollars Declined Amid Risk Aversion in Asian Trade
  • See Economic Releases Directly on Your Charts with the DailyFX News App

Third-quarter UK GDP figures headline the economic calendar in European trading hours. The year-on-year growth rate is expected to register at 2.4 percent, matching the two-year low recorded in the three months through June.

Traders will look to the outcome to guide Bank of England monetary policy expectations. As it stands, market expectations are already leading dovish. Futures pricing suggests investors do not expect tightening until the third quarter of 2016. That suggests the British Pound may be more sensitive to an upside surprise versus a disappointing one.

The safety-linked Japanese Yen outperformed while the risk-geared Australian, Canadian and New Zealand Dollars declined as sentiment soured in overnight trade. The MSCI Asia Pacific regional benchmark stock index declined in a move that seemed corrective after prices hit a two-month high yesterday.

Knock-on weakness from Wall Street – which saw a similar pullback from levels unseen since August – may have also played a role. The proximity of high-profile event risk headlined by the FOMC policy announcement has probably encouraged the retracement.

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Asia Session

GMTCCYEVENTACTEXPPREV
21:45NZDTrade Balance (NZ$) (SEP)-1222M-825M-1079M
21:45NZDExports (NZ$) (SEP)3.69B3.9B3.71B
21:45NZDImports (NZ$) (SEP)4.91B4.78B4.79B
21:45NZDTrade Balance 12 Mth YTD (NZ$) (SEP)-3235M-2846M-3372M
22:30AUDANZ Roy Morgan Weekly Consumer Conf113.4-113.3
23:50JPYPPI Services (YoY) (SEP)0.6%0.6%0.8%
01:30CNYIndustrial Profits (YoY) (SEP)-0.1%--8.8%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00CHFUBS Consumption Indicator (SEP)-1.63Low
09:00EUREurozone M3 Money Supply (YoY) (SEP)5.0%4.8%Low
09:30GBPGDP (QoQ) (3Q A)0.6%0.7%High
09:30GBPGDP (YoY) (3Q A)2.4%2.4%High
09:30GBPIndex of Services (MoM) (AUG)0.2%0.2%Low
09:30GBPIndex of Services (3M/3M) (AUG)1.0%0.8%Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.08801.09591.10091.10381.10881.11171.1196
GBPUSD1.51951.52711.53111.53471.53871.54231.5499

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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