There was no ambiguity from the pound this Wednesday, with the currency making it clear how it felt about the UK’s preliminary third quarter GDP reading.
The Q3 growth figures came in at 0.4%, higher than both what was forecast and the 0.3% seen in Q2 (though, on a per person basis – i.e. factoring in population changes – the third quarter number was indeed 0.3%). It’s not a great reading, by any means, with year-on-year growth stuck at a meagre 1.5% and the construction output actually shrinking for a second consecutive month.
However, if investors are to be believed it’s sufficiently hawkish enough to nudge the Bank of England towards an early November rate hike. Cable jumped 0.8% once the figure was released, sending sterling back above the $1.32 level if fell below yesterday, while against the euro, the pound rocketed 0.9% higher, allowing it to head towards €1.125. In the face of this growth the FTSE wilted, briefly falling through 7500 before settling at 7515.
Looking to this afternoon and the Dow Jones is set for a slow start, with the futures pointing to a slight 15 point increase when the bell rings on Wall Street. In terms of data, the main draw is the core durable goods orders reading, which is expected to remain unchanged at 0.5% (the non-core figures is forecast to halve from 2.0% to 1.0%).
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