UK third quarter GDP data released better than expected, the Bank of England reduced the incentives to expand in the near future the possibility of rapid rise in sterling against the dollar to new high days. Currently, investors of the other major central banks are concerned about the policy direction.

British third quarter GDP was better than expected

Data released yesterday afternoon, the British third quarter GDP growth rate of 0.8% in quarter, annual rate of 2.8%, better than the media survey of economists before the expected third quarter GDP quarter rate of 0.4% annual rate of 2.4%. In addition, the UK’s second-quarter rate and the annualized quarterly GDP were 1.2% and 1.7%.

After the publication of the data, the pound rose sharply against the dollar to be lifted above the intraday high of 1.58, because the data better than expected Bank of England reduced the market may take further quantitative easing expectations.

Before the release of the data, economists believe that economic performance in the third quarter of the UK may be bad, because industrial and service sectors are losing momentum, consumption levels have fallen sharply, while the British economy still faced with the negative impact of fiscal austerity measures.

The weak economic performance of the Bank of England expected to move closer to further increase the likelihood of quantitative easing, but the latest figures show the UK in September consumer price index (CPI) rose 3.1%, higher than the 9 months straight under the Bank of England 2% target by 1 percentage point or more, so the Bank of England may face a complicated situation, high inflation will limit the Bank of England policy space.

Last week the Bank of England monetary policy meeting minutes showed the Bank of England Monetary Policy Committee has been divided into raising interest rates, increased stimulation and to maintain the current position of the same three schools.

Policy uncertainty sterling trend shocks. But the results show that the UK rate of the third quarter quarter GDP performance is expected to double, so that investors feel at ease, worried about the increasing stimulus is reduced, the strong pound rise. Evaluation of the UK Chancellor of the Exchequer Osborne, GDP data raised the market’s confidence in the UK economy, UK economy is steadily recovering.

Despite the reported better than expected GDP data, but analysts are still risks to remind the British economy, that fiscal austerity program. Britain plans to reduce the deficit to win a positive evaluation of rating agencies, Standard & Poor’s announced yesterday confirmed that the British AAA rating, and the British sovereign debt rating outlook raised to stable, Standard & Poor’s view that the risk reduction plan for fiscal consolidation, the next 5 years the average British economy increase should be 2%. But analysts believe that the fiscal austerity of the British economic recovery should not be underestimated. British government plans to cut over the next four years, 156 billion pounds.

At 19:00 on the 26th to the pound against the dollar reached an intraday gains on top of 150 basis points, also crosses the euro against the pound after the announcement of the GDP data in the rapid decline.

Concerned about the tendency of major central bank policy

In addition to the UK GDP data, also released Friday in the third quarter GDP, the current expectation is that the third quarter of the U.S. economy may accelerate the expansion of the previous quarter, consumer spending may also be increased.

But analysts say the U.S. economic growth rate is still fast enough to reduce the unemployment rate up to 9.6%, so the Fed still had to start a new round of quantitative easing policy.

Currently, the market for the Federal Reserve will launch a new round of high QE hope, in addition, investors of the other major central banks are very concerned about the policy orientation, and in order to determine the exchange rate.

As the dollar continues to remain weak, mainly non-US currencies are still rising channel. Australia announced on Monday’s PPI data than expected, investors focus on the 27 to be released in Australia’s third-quarter CPI data. The general view was that if the strong CPI data, or the Reserve Bank of Australia means that increase the likelihood that further rate hikes, while the Australian dollar may be homeopathic breakthrough parity.

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