Japanese Yen May Move More than British Pound on UK GDP Data
TALKING POINTS – UK GDP, BRITISH POUND, JAPANESE YEN, US DOLLAR
- Fourth-quarter UK GDP data may undershoot baseline forecasts
- Timid BOE rate hike outlook may undercut British Pound impact
- Yen, US Dollar may rise as data stokes global slowdown worries
UK GDP data headlines the economic calendar in European trading hours. A slowdown is expected, with output adding 0.3 percent in the fourth quarter after rising 0.6 percent in the prior period. UK data flow has palpably weakened relative to forecasts recently, opening the door for disappointment.
A soft result may have little lasting impact on the British Pound. Markets have understandably priced out a rate change ahead of the March 29 Brexit deadline. The chance of an increase later this year is hovering around 30 percent. That means a weak print has relatively little scope to alter baseline policy bets.
Such an outcome might amplify simmering concerns about a downturn in global economic growth however. That might undermine market-wide risk appetite, boosting the anti-risk Japanese Yen and US Dollar while punishing the sentiment-geared Australian, Canadian and New Zealand Dollars.
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--- 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.