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Can UK gross domestic product encourage fresh pound gains?

business-articlesCan UK gross domestic product encourage fresh pound gains?
  • UK gross domestic product uptick to shore up pound
  • US dollar to benefit if US consumer price index holds steady
  • New Zealand dollar to gain ground if food price index rises
 
 
Pound looks for boost on UK growth data
 
Fresh gains could be in store for the pound this morning if January’s UK gross domestic product data shows an improvement on the month as forecast.
 
After December’s monthly contraction investors are hoping to see modest growth of 0.2% at the start of the year, suggesting that the UK economy is recovering its lost momentum.
 
However, another month of underwhelming growth could weigh heavily on GBP exchange rates as uncertainty over Brexit continues to cloud the economic outlook.
 
Focus will also fall on January’s trade data, with forecasts pointing towards a widening of the trade deficit.
 
 
Steady inflation to benefit US dollar
 
The mood towards the US dollar may improve on the back of this afternoon’s US consumer price index data.
 
Investors expect to see the CPI hold steady on the year at 1.6%, indicating that inflationary pressure within the US economy is still building.
 
Although this is not the Federal Reserve’s preferred measure of inflation a solid showing here could still shore up USD exchange rates.
 
If price pressures show signs of easing, though, the US dollar could come under renewed pressure.
 
 
Rising food prices to encourage New Zealand dollar gains
 
Tonight’s New Zealand food price index could offer NZD exchange rates a rallying point, provided that prices pick up on the month.
 
Signs of increasing inflationary pressure within the economy could give the New Zealand dollar a boost against its rivals.
 
As rising prices would give the Reserve Bank of New Zealand (RBNZ) less incentive to cut interest rates this would limit the downside potential of NZD exchange rates.
 
An increased sense of market risk aversion may still dent the New Zealand dollar in the near term, however.
 
 
Upcoming Data:
 
Tuesday, 12th March 2019

09:30 GBP Trade Balance
09:30 GBP Gross Domestic Product
12:30 USD Consumer Price Index
21:45 NZD Food Price Index
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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