UK GDP set to rise modestly in Q3, bolstering bets on BoE December rate cut | FXStreet

The UK’s Office for National Statistics (ONS) will release the advanced prints of the Q3 Gross Domestic Product (GDP) on Thursday. If the figures meet market consensus, the UK economy would have maintained its pace of expansion at 1.4% annualised, showing that momentum could have begun to stall. The QoQ report is expected to show a mild GDP growth of 0.2%.

At the Bank of England’s (BoE) latest gathering, the Monetary Policy Committee (MPC) anticipated the domestic economy to grow by 1.5% in the current year.

According to projections, the BoE could further lower its policy rate by an additional 25 basis points at its December 18 gathering, particularly following a cooling labour market and a loss of momentum in domestic inflation.

Projections for the UK GDP

The Office for National Statistics (ONS) reported that the UK economy expanded 0.3% QoQ in the second quarter, compared with the 0.7% gain posted in the January-March period. On a monthly basis, the UK GDP expanded by a meagre 0.1% in September and is expected to remain flat in October.

In its latest meeting, the BoE downgraded its forecast for economic growth and now expects GDP to expand by 0.2% in Q3 (from “around 0.4%” in September).

Regarding inflation, the UK’s Consumer Price Index (CPI) continues to rank among the highest within its major peers. As indicated by the most recent ONS report, in September, the headline CPI rose by 3.8% YoY, while the core print gained 3.5% YoY and 4.7% from services inflation.

When will the UK release Q3 GDP, and how could it affect GBP/USD?

The UK will release the preliminary Q3 Gross Domestic Product (GDP) on Thursday at 7:00 GMT.

Pablo Piovano, Senior Analyst at FXStreet, says, “GBP/USD’s current recovery appears to have met some decent hurdle around the 1.3200 region.”

“If bulls push harder, Cable could challenge its critical 200-day SMA in the 1.3270 region, prior to provisional barriers at its 55-day and 100-day SMA at 1.3382 and 1.3420, respectively. Further up comes the October top at 1.3527 (October 1), prior to the September ceiling at 1.3726 (September 17),” Piovano adds.

“On the flip side, the loss of the November base at 1.3010 (November 5) could see the next significant contention not before the April floor at 1.2707 (April 7),” he concludes.