On Friday UK GDP numbers showed that growth in the UK had slowed down to just 0.1% by September, which has had an instant negative impact on Sterling exchange rates. What this release has shown is that the actions taken in the latest budget will now most definitely have an adverse effect on the UK economy.
Tax hikes will only slowdown the economy further and hit UK businesses, many are now expecting a rollback on some of these policies to try and boost the UK economy again before things get too bleak, so it will be worth keeping an eye on this for a potential Sterling reversal.
In my last report I mentioned that the BoE were not expecting another rate cut until February, however, due to this GDP data many analysts are now increasing the odds on a December cut as the data release undershot any BoE forecasts- this is another reason why the Pound is weaker.
This week, we have a few data releases of note with a few ECB & Fed speeches, the most notable being Christine Laggard’s speech at 6:30pm, given the issues in Germany currently, it will be interesting to see thee ECB’s stance on monetary policy in response to it, the Fed speeches should reiterate the current Fed stance on a rate cut for December. Aside from these, there are no economic data releases that should affect the market.
