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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

Ilya Spivak, Head Strategist, APAC

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

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Trade Balance (NZ$) (SEP)

-1222M

-825M

-1079M

21:45

NZD

Exports (NZ$) (SEP)

3.69B

3.9B

3.71B

21:45

NZD

Imports (NZ$) (SEP)

4.91B

4.78B

4.79B

21:45

NZD

Trade Balance 12 Mth YTD (NZ$) (SEP)

-3235M

-2846M

-3372M

22:30

AUD

ANZ Roy Morgan Weekly Consumer Conf

113.4

-

113.3

23:50

JPY

PPI Services (YoY) (SEP)

0.6%

0.6%

0.8%

01:30

CNY

Industrial Profits (YoY) (SEP)

-0.1%

-

-8.8%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

07:00

CHF

UBS Consumption Indicator (SEP)

-

1.63

Low

09:00

EUR

Eurozone M3 Money Supply (YoY) (SEP)

5.0%

4.8%

Low

09:30

GBP

GDP (QoQ) (3Q A)

0.6%

0.7%

High

09:30

GBP

GDP (YoY) (3Q A)

2.4%

2.4%

High

09:30

GBP

Index of Services (MoM) (AUG)

0.2%

0.2%

Low

09:30

GBP

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

1.0%

0.8%

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.0880

1.0959

1.1009

1.1038

1.1088

1.1117

1.1196

GBPUSD

1.5195

1.5271

1.5311

1.5347

1.5387

1.5423

1.5499

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

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