Daily Market Report 28/01/2014


Although there was no data out from the UK yesterday, the pound was boosted significantly, erasing the majority of its losses from Friday following Mark Carney’s comments on interest rates.

The market seemed to be buoyed ahead of today’s fourth quarter GDP figures, where we are expecting to see the first full year the UK expanded in every quarter since 2007.  


Data released yesterday morning showed that manufacturers in Germany were more upbeat that analysts were expecting with regards to business conditions.

The German Business Climate Index rose to a 30 month high of 110.6 in January beating an expected rise of 110. The IFO Expectations Index also rose to 108.90 from 107.40.

However markets swept aside the good data with the news being ignored by market participants. As the broader worries of the global economy (worries over sluggish growth in China and potentially the Fed tapering quantitative easing further) taking out risk appetite.


Mixed data from the US yesterday as Market Services PMI came in higher than expectations, rising to 56.6 from 55.7 in January; but New Home Sales dropped in December from 445,000 to 414,000.

Unsurprisingly movements on the US dollar were very limited, especially ahead of the Federal Reserve meeting on Wednesday, where markets are expecting the Fed to reduce their monthly bond buying program by US$10bn.


As mentioned above, markets will be looking towards the UK’s 4th quarter GDP figures before increasing bets on the pound strengthening further. Expectations are for the yearly figure to have improved from 1.9% to 2.8%, whilst quarterly on quarterly growth is expected to remain at 0.8%.

For a guide for what the Fed may do on Wednesday, markets will be looking at the US Durable Goods figures due for release in the afternoon. Current expectations are for orders set to have fallen to 1.8% from 3.4% for the month of December; we would expect broad US dollar weakness should this occur.

Key Announcements:

9.30am – GBP – Gross Domestic Product (Q4): Expected to remain at 0.8% quarter on quarter.

13.30pm – USD – Durable Goods Orders (Dec): Expected to fall to 1.88%.

15.00pm – USD – Consumer Confidence (Jan): Expected to rise to 78.9.