It is extremely important that the British GDP report for Q4 at least coincided with the forecast
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British pound is past the Bank of England decision, which didn't provided significant changes. Now it's time to discover the UK GDP, published tomorrow morning. Could a higher-than-expected print or one that meets expectations support pound sterling? Andrey Goilov helps us to provide FXMAG.COM readers with valuable conclusions.
After a 50bp rate hike, could promising GDP print provide further support for GBP?
It is extremely important that the British GDP report for Q4 at least coincided with the forecast. The expectations are that the economy could have remained at zero. After a decline by 0.3% q/q in Q3 even such a result could be a good one. Next, much will depend on the report components: it is vital to see, which sectors supported the economy the most, where to look for footholds for growth, and where there have been too much damage. Industrial production in December will be a curious one to see among other things. If the GDP turns out as forecast or higher, the GBP will get some support. Then the GBPUSD pair will be able to recover to 1.2100, from where it can reach 1.2150-1.2200.
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Are you of the opinion German CPI on Friday will confirm inflation slowdown?
The prelim CPI in Germany in January is expected to have grown by 0.8% m/m upon falling by the same percentage the previous month. If the statistics coincide with the forecast, this will mean the CPI is speeding up instead of slowing down. The main component that might be pushing inflation up is foods. Due to supply chains issues inside and outside Europe prices for foods have been growing for the whole of 2022. Most likely, they will keep on growing in 2023. And this will support growth of the main price indicator. As soon as the foods component stabilizes, inflation will stop growing. For Germany, growth of prices is a serious trouble. The cost of the daily life of households is increasing gradually, which pumps up social instability, among other things.
