FXStreet (Łódź) - James Knightley from ING observes that UK output is back above its pre-crisis levels and with upward GDP revisions due at the end of September this points to shrinking spare capacity in the economy and the growing prospect of interest rate rises.

Key quotes

“Last Friday saw UK 2Q14 GDP growth come in at 0.8% QoQ or 3.1% YoY, in line with market expectations.”

“This was the fastest rate of annual GDP growth since 4Q07 and means that the UK economy has finally regained all of the lost output from the recession.”

“The Bank of England believe on their measures that the economy grew 0.9% in 2Q and expect 1Q GDP to be eventually revised up to 0.9% from the 0.8% currently reported.“

“Furthermore, there are going to be significant revisions to the UK GDP statistics this September with a briefing paper released in June suggesting that the recession may have been shallower than originally thought – to the tune of around 1% of GDP.”

“The key outcome from all this will be to suggest that the UK has less spare capacity than previously thought and so inflation pressures could start to build earlier than currently forecast by the BoE.”

“As such, it is likely to support our view that the BoE will end up tightening monetary policy sooner rather than later with November being our favoured date for the first rate hike.”

Related Articles
  1. Forex Education

    Four Currencies Under the Spotlight in 2016

    With currencies having become the “tail that wags the dog,” in terms of their impact on the global economy, these four currencies will be under the spotlight in 2016.
  2. Forex Fundamentals

    These Currencies Are The Biggest Losers Of The Stock Downturn

    Here’s a list of the hardest-hit currencies amid the global stock market mayhem.
  3. Forex Strategies

    Will the Euro Continue to Rally? (EUO)

    The euro is rallying. Should investors chase this performance or is the real opportunity on the other side of the trade?
  4. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  5. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  6. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  7. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  8. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  9. Investing

    Financial News Comparison: Bloomberg Vs. Reuters (BAC, GOOG)

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  10. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
COMPANIES IN THIS ARTICLE
Trading Center