GBP/JPY Weakens Following NIESR Estimate for a Slowdown in UK Expansion in Q4
- NIESR estimates 0.7% GDP expansion in Q4
- Estimate down from Q3 expansion and BoE’s prediction for Q4
- GBP/JPY falls towards a 3-day low
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UK GDP growth will be reported at 0.7% for the fourth quarter of 2013, suggesting 1.9% economic expansion for the year, according to an estimate by the National Institute of Economic and Social Research Institute.
The NIESR estimate came in lower than the Bank of England’s prediction that Q4 economic growth will be 0.9%. UK GDP was reported 0.8% higher in Q3, which was the fastest growth in over three years and up from 0.7% expansion in Q2.
The BoE announced in August that it will only raise interest rates once employment has fallen back below 7%, and that was followed by a comment by Governor Carney in December that the recovery may be gaining pace. Therefore, the pace of economic growth may affect the BoE’s decision for how long to maintain accommodative policy, and faster than expected growth may encourage Pound gains.
The Pound declined against the Japanese Yen following the NIESR announcement, but the fall had started well before the release and failed to break the 3-day low set earlier today at 171.35. A 2-week low at 170.40 may provide further support.
GDP/JPY 1-Minute: January 10, 2014
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .
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