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U.K. Economic Growth Accelerates as Crunch BOE Meeting Nears

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    U.K. Economic Growth Accelerates as Crunch BOE Meeting Nears

    Taken from Bloomberg:

    The U.K. economy grew more than forecast in the third quarter, which may add fuel to speculation that the Bank of England is about to raise interest rates for the first time in a decade.

    Gross domestic product rose 0.4 percent in the three months, beating the 0.3 percent forecast in a Bloomberg survey. Services rose 0.4 percent, industrial production jumped 1 percent while construction shrank the most in five years.

    The pound climbed after the report, which is the last major hard data BOE officials will get on the health of the economy before their crucial meeting next week. With inflation at the fastest in more than five years, Governor Mark Carney has said tightening may be needed within months, and economists and traders expect the bank to increase borrowing costs on Nov. 2.

    The pound was 0.2 percent higher at $1.3164 as of 9:31 a.m. London time.

    Even though the latest quarter was better than expected, growth is still running at a weaker pace than it was in 2016. The pace is also slower than when the BOE has raised interest rates in the past, though Carney’s arguments for a hike are mainly centered on the erosion of slack.

    Some have warned that a hike could be a policy mistake given the U.K’s relatively sluggish growth and Brexit-related uncertainty that’s clouding the outlook. They also argue that inflation is being driven by the weaker pound, rather than being domestically generated.

    But in Carney’s assessment, Brexit has crimped U.K. potential growth, lowering the level of expansion the economy can take without overheating.

    Rate Doubt

    Traders are now pricing in about an 80 percent chance of a BOE rate increase from 0.25 percent next week, though recent comments from some BOE officials suggest the decision is not yet cut and dried.

    The GDP figures from the Office for National Statistics on Wednesday are a first estimate and based on about 44 percent of the data that will ultimately be available. On an annualized basis, comparable to U.S. data, the U.K. economy grew 1.6 percent in the third quarter. The U.S. is forecast to have expanded 2.5 percent, according to a Bloomberg survey before data on Friday.

    The U.K.’s comparatively tepid growth has left it the odd one out in the global upswing. While the IMF raised its forecasts for almost every advanced economy the month, the U.K. outlook was left unchanged. At 1.7 percent this year and 1.5 percent in 2018, it will grow at just half the global average.

    #2
    Originally posted by Martin@AS Financial View Post
    Taken from Bloomberg:

    The U.K. economy grew more than forecast in the third quarter, which may add fuel to speculation that the Bank of England is about to raise interest rates for the first time in a decade.

    Gross domestic product rose 0.4 percent in the three months, beating the 0.3 percent forecast in a Bloomberg survey. Services rose 0.4 percent, industrial production jumped 1 percent while construction shrank the most in five years.

    The pound climbed after the report, which is the last major hard data BOE officials will get on the health of the economy before their crucial meeting next week. With inflation at the fastest in more than five years, Governor Mark Carney has said tightening may be needed within months, and economists and traders expect the bank to increase borrowing costs on Nov. 2.

    The pound was 0.2 percent higher at $1.3164 as of 9:31 a.m. London time.

    Even though the latest quarter was better than expected, growth is still running at a weaker pace than it was in 2016. The pace is also slower than when the BOE has raised interest rates in the past, though Carney’s arguments for a hike are mainly centered on the erosion of slack.

    Some have warned that a hike could be a policy mistake given the U.K’s relatively sluggish growth and Brexit-related uncertainty that’s clouding the outlook. They also argue that inflation is being driven by the weaker pound, rather than being domestically generated.

    But in Carney’s assessment, Brexit has crimped U.K. potential growth, lowering the level of expansion the economy can take without overheating.

    Rate Doubt

    Traders are now pricing in about an 80 percent chance of a BOE rate increase from 0.25 percent next week, though recent comments from some BOE officials suggest the decision is not yet cut and dried.

    The GDP figures from the Office for National Statistics on Wednesday are a first estimate and based on about 44 percent of the data that will ultimately be available. On an annualized basis, comparable to U.S. data, the U.K. economy grew 1.6 percent in the third quarter. The U.S. is forecast to have expanded 2.5 percent, according to a Bloomberg survey before data on Friday.

    The U.K.’s comparatively tepid growth has left it the odd one out in the global upswing. While the IMF raised its forecasts for almost every advanced economy the month, the U.K. outlook was left unchanged. At 1.7 percent this year and 1.5 percent in 2018, it will grow at just half the global average.
    0.4%!!

    That must rank pretty high in the OECD rankings.

    Comment


      #3
      The "good news" is not reflected in the GBP v EURO FX, not so much as a gnat's fart's worth. Maybe the markets don't believe the government stats any longer.
      "A people that elect corrupt politicians, imposters, thieves and traitors are not victims, but accomplices," George Orwell

      Comment


        #4
        Originally posted by Paddy View Post
        The "good news" is not reflected in the GBP v EURO FX, not so much as a gnat's fart's worth. Maybe the markets don't believe the government stats any longer.
        Stop talking the economy down! A competitively low currency is good news!!

        Comment


          #5
          Originally posted by Paddy View Post
          The "good news" is not reflected in the GBP v EURO FX, not so much as a gnat's fart's worth. Maybe the markets don't believe the government stats any longer.
          And there was me thinking Sterling had strengthened across the board.

          Oh hang on, it's down against the Bangladeshi Taka.

          Comment


            #6
            Originally posted by The_Equalizer View Post
            And there was me thinking Sterling had strengthened across the board.
            Isn't that terrible news for the economy?

            Comment


              #7
              Originally posted by northernladyuk View Post
              Isn't that terrible news for the economy?
              In this case, no.

              Comment


                #8
                Originally posted by The_Equalizer View Post
                In this case, no.
                Good man. Gotta keep positive.

                Comment


                  #9
                  I though last week growth was down, inflation up and we were all going to have to eat our babies to stay alive through winter?

                  Or was that just bollo<ks?

                  Comment


                    #10
                    Originally posted by original PM View Post
                    I though last week growth was down, inflation up and we were all going to have to eat our babies to stay alive through winter?

                    Or was that just bollo<ks?
                    Why don't you work out the numbers for yourself?
                    Oh I forgot, you're thick as mince.
                    I think the take-away (that has been obscured by Martin's misleading thread title) is this:

                    "The U.K.’s comparatively tepid growth has left it the odd one out in the global upswing. While the IMF raised its forecasts for almost every advanced economy the month, the U.K. outlook was left unchanged. At 1.7 percent this year and 1.5 percent in 2018, it will grow at just half the global average"

                    HTH, BIDI.
                    Hard Brexit now!
                    #prayfornodeal

                    Comment

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