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Daily analysis 24.08.2017

24 Aug 2017 12:24|Bartosz Grejner

The UK's GDP growth in Q2 has been in line with expectations, although data has shown little marginal growth in household spending, while the level of enterprise investment has remained unchanged. The valuation of Polish currency without major changes, but quotations in relation to the forint has shown its inner weakness.

The most important macro data (CET - Central European Time). Surveys of the macro data are based on information from Bloomberg unless noted otherwise.

  • 2.30 p.m.:Initial jobless claims in the USA (estimates: 238k; previously: 232k).

The pound has been paring some losses, however, it has been still under pressure

The Office for National Statistics (ONS) has released economic growth pace data in Q2 in the UK today, which has proved to be in line with the preliminary reading. The GDP in April-June has grown at a pace of 0.3% compared to the previous quarter and 1.7% compared to the same period last year.

In turn, the enterprise investments have been below the line, with expected a growth of 0.4% in Q1 vs. 0.5% in Q2 2016. In both cases, however, these investments have remained unchanged. This has also meant that the contribution of enterprise investment to the quarterly GDP growth rate has been zero.

Moreover, the households' consumption has not entranced- its spending has increased by 0.1% compared to the previous quarter, which has been the lowest increase since 2014. In turn, the contribution of to the 0.3% of GDP growth (quarterly) has amounted to only 0.1 percentage points. This is likely to be a result of a high level of inflation, which has been causing the real wage growth to be on negative level.

After yesterday's depreciation of the pound, it has pared some losses today before the publication of the ONS. Although enterprises' investment has slightly disappointed the expectations, the second reading of GDP has been likely to be relatively neutral for the pound. The negative inflation's impact on wages, and therefore, on household spending has not been a surprise and has already been discounted.

Despite paring some of yesterday's losses, the British currency has been still under pressure, mainly due to negotiations connected with Brexit. The GBP/USD pair has been close to 1.28, and what should be bared in mind is that the dollar has been significantly weakened by economic factors and an uncertain increase in inflation. The EUR/GBP trading has been at 0.92, still close to yesterday's new highs since October 2009 (excluding "flash crash" events from last year).

Today, the economic conference in Jackson Hole (USA) has started with the attendance of central banks' members. This event will most likely attract investors' attention in the next two days and may cause increased fluctuations in the foreign exchange market. Especially tomorrow, when the speeches will be held by the President of the European Central Bank and the President of the Federal Reserve.

The zloty has been relatively weak

Changes in the euro's, franc's or the pounds' prices have been marginal till the midday in comparison to yesterday, although, since the morning, a slight increase in exchange fluctuations has been observed. The Polish currency has set new lows in relation to the Hungarian forint (around 10.00 a.m.) - the PLN/HUF exchange rate has fallen to approx. 70.4, which has been the lowest level in 7 months. In the following hours, the rate has increased to 70.8, however, quotations in relation to the Hungarian currency has all the time been showing the internal weakness of the zloty.

The Polish Central Statistical Office (GUS) has released July's unemployment rate's data in Poland, which has amounted to 7.1%, similar like in June. It turned out to be slightly worse than expected (7.0%), although its impact on the zloty has been relatively neutral - the unemployment rate has currently been at multi-year lows and a downward trend, and by the end of the year it is likely to fall below 7%.

Today's calendar has been relatively limited therefore there have not been foreseen any significant fluctuations in the Polish currency. However, it should be remembered that conference at the Jackson Hole has started today, and although the most important speeches will probably be held tomorrow, the incoming dispatches to news agencies may cause increased exchange rate fluctuations.

 

24 Aug 2017 12:24|Bartosz Grejner

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

23 Aug 2017 15:04

Afternoon analysis 23.08.2017

23 Aug 2017 12:27

Daily analysis 23.08.2017

22 Aug 2017 15:14

Afternoon analysis 22.08.2017

22 Aug 2017 12:25

Daily analysis 22.08.2017

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