Daily analysis 26.01.2017

The British economic growth appeared to be better than expected, due to an increase of the services sector. This year’s beginning appeared to be positive for the German consumers. The zloty remains in a positive condition.

Limited impact of GDP data

Today, the Office for National Statistics (ONS) presented its report regarding the British GDP growth for the fourth quarter of 2016. The result was at the level of 0.6% QoQ (2.2% YoY). This is by 0.1% better than expected. Moreover, the ONS estimates that the 2016 GDP growth will be at the level of 2%, which is 0.2% lower than in 2015 and 1.1% lower than in 2014.

The GDP growth result for the fourth quarter was mainly caused by the services sector (contribution of industry, building sector and agriculture was at the level of 0%). Contribution of the hotel sector and the restaurant sector was at the level of 0.24%. Contribution of the financial services sector was even higher (0.28% and 0.9% QoQ).

The pound has been gaining value recently. Over the course of past ten days, its value against the dollar increase approximately 5.5%. However, due to the GDP report, the British currency wore-off slightly. The GBP/USD was pushed from 1.267 to 1.260. Nevertheless, we need to keep in mind that some investors may execute their gains in relation to the above mentioned appreciation of the pound.

The pound’s depreciation was also caused by the stronger dollar. The EUR/USD has been going towards 1.07 since the beginning of the Asian session. Moreover, the USD/JPY went above 114.

Optimism among German consumers

The GfK consumer sentiment index increased to the level of 10.2 points in December. This extends the upper trend of optimism regarding the German economy, which has been observes since autumn. The percentage of consumers who estimate an improvement in the German economy has been increasing for the fourth consecutive month. This sentiment is supported by the data as well. According to Destatis, in 2016 the German economy quoted its largest growth (1.9%) since 2011.

Expectations regarding the future income increased as well. However, this growth was not as significant as it was at the end of 2016. A positive trend mainly continues due to a positive condition of the German labor market. Nevertheless, inflation may smother the future expectations regarding income. This index was at the level of 1.7% in December, but this was mainly a result of increasing prices of raw materials (oil, in particular). The above factors also increased the purchase proneness, which decreased slightly in December.

Today’s data regarding the consumer sentiment confirms that the condition of the German economy is improving. Even though the business sentiment reading from yesterday was lower than the one from December, its value was still near the long-term records. The year 2017 may appear favorable for the German economy, due to potential growth of the American economy. Moreover, positive news from Germany are positive for Poland as well.

EUR/PLN is near 4.35

The zloty remains in a positive condition and yet again made attempts to go below 4.35 on the EUR/PLN. Internal strength on the zloty can also be seen against the forint. The PLN/HUF has been increasing for the tenth consecutive day and today, it reached the level of 71.49. Due to a positive condition of the dollar, the USD/PLN reached the level of 4.06. However, this is still near its two-month minimum (approximately 4.043). The situation was similar in the case of the franc, which reached the level of 4.06 PLN at approximately 12.00 AM. The Swiss curency has been moving within a relatively narrow range of 4.04-4.08 since last week. We will most likely see some significant changes on the zloty next week, because the Polish Central Statistical Office (GUS) will publish the GDP growth for 2016 on Tuesday.

Today, the National Bank of Poland published the data regarding the company sector, which shows a slight improvement in its condition in the fourth quarter. However, forecasts for the current quarter suggest its decline. This may be related to uncertainty regarding changes in legal regulations, as well as fluctuations of the currency exchange rates. Nevertheless, companies expect a further improvement in the first quarter of 2017, due to an increase in the foreign demand. Forecasts regarding the employment level show that 13% of the companies are planning to increase employment and 8% are planning to reduce it. Moreover, entrepreneurs estimate that salaries will continue growing as well. The future raises are to concern a larger portion of employees.