United Kingdom Country Profile - Economy, Currency, Central Bank, Canadian Dollar, CAD

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Country and Central Bank Watch

United Kingdom

The United Kingdom is the 5th largest economy in the world, with a GDP of $2.398 trillion, and a population of 60 million. The economy has experienced positive growth in every quarter since 1992, and the central bank in '06 - '07 hiked interest rates to 5.75% to stem an increase in inflation. London is the world's largest financial center, with the UK having £21bn of financial exports in 2005. Manufacturing accounts for 16% of national output and 13% of employment. UK property markets have been booming for the last seven years, but have recently shown signs of straining as interest rates climbed and financial markets were hit with a credit crunch in August '07.

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United Kingdom's Fundamental Indicators and Chart

Monthly Data for February, 2010

Date	EST	Indicator	Actual	Forecast	Previous
2/1	4:30am	Manufacturing PMI	56.7	54.1	54.1
		For December Provided by: Markit Economics Official Release: PDF From the Release: "January data from CIPS/Markit signalled that the UK manufacturing sector built on its solid end to 2009. The headline seasonally adjusted Purchasing Managers’ Index® (PMI®) rose to 56.7, from an upwardly revised figure of 54.6 in December, to record its highest level since October 1994. The headline PMI – which provides a single figure indication of operating conditions in the manufacturing sector – has now remained above its no-change level of 50.0 for four consecutive months. The index is calculated using data collected on new orders, production, employment, supplier performance and stocks of purchases."
2/1	4:30am	Net Consumer Lending	1.2B	1.2B	1.1B
		For December Provided by Bank of England Official Release: HTML PDF Net Consumer Credit: £0.1B, forecast -£0.4B, pr. -£0.4B (Nov), -£0.6B (Oct), -£0.3B (Sep),-£0.3B (Aug), -£0.2B (Jul), £0.1B (Jun) Net Mortg. Lend.: £1.2B, forecast 1.6B, pr. £1.6B, £0.9B (Oct), £0.9B (Sep), £1.0B (Aug), -£0.4B (Jul), £0.3B (Jun), £0.3B (May)
2/1	4:30am	Mortgage Approvals (BOE)	59K	62K	60K 61K
		For December Provided by Bank of England Official Release: HTML PDF Net Mortg. Lend.: £1.2B, forecast £1.6B, pr. £1.6B, £0.9B (Oct), £0.9B (Sep), £1.0B (Aug), -£0.4B (Jul), £0.3B (Jun), £0.3B (May)
2/2	4:30am	Construction PMI	48.6	47.7	47.1
		For January Provided by: Markit Economics
2/2	7:01pm	Consumer Confidence Index (NCCI)	73	70	70 69
		For January (s.a.) Provided by: Nationwide Official Release: PDF Current Conditions: 23, pr. 20 (Dec), 20 (Nov), 22 (Oct), 19 (Sep), 17 (Aug), 16 (Jul), 17 (Jun), 18 (May), 21 (Apr), 20 (Mar), 22 (Feb), 23 (Jan), 28 (Dec), 32 (Nov), 35 (Oct), 39 (Sep), 46 (Aug), 49 (Jul) Expectations Index: 107, pr. 101 (Dec), 108 (Nov), 106 (Oct), 108 (Sep), 94 (Aug), 89 (Jul), 88 (Jun), 76 (May), 70 (Apr), 57 (Mar), 57 (Feb), 51 (Jan), 61 (Dec), 67 (Nov), 69 (Oct), 58 (Sep), 58 (Aug) Spending Index: 96, pr. 106 (Dec), 107 (Nov), 103 (Oct), 103 (Sep), 97 (Aug), 94 (Jul), 105 (Jun), 103 (May), 98 (Apr), 97 (Mar) 92 (Feb), 83 (Jan), 82 (Dec), 69 (Nov), 55 (Oct), 53 (Sep), 52 (Aug), 53 (Jul) From the Release: "Despite a downward stutter last month, the Nationwide Consumer Confidence Index recorded a three point increase in January to 73, almost double the level of confidence recorded during the same period last year (39%). While the Present Situation and Expectations indices both ticked up to 23 and 107 respectively, confidence in spending fell away sharply during the month and dropped to 96 in January from 108 in December."
2/2	7:01pm	BRC Shop Price Index y/y	2.3%		2.2%
		For Janaury Provided by: British Retail Consortium Previous Release: HTML DOC
2/3	4:30am	Services PMI	54.4	56.6	56.8
		For January Provided by: Markit Official Release: PDF From the Release: "UK service sector growth stalled at the start of 2010 as snow-related disruptions undermined activity and new business. Rates of expansion of both variables were the slowest for five months, while there was a further (albeit modest) decline in employment. The increase in VAT at the start of the year underpinned the strongest rise in input costs since October 2008 and also led to slightly higher output charges. January’s seasonally adjusted CIPS/Markit Business Activity Index posted above the 50.0 no-change mark for a ninth successive month. The index weakened somewhat since December, falling to 54.5 (from 56.8) and signalled the slowest rise in activity for five months."
2/4	4:00am	House Prices m/m (Halifax Bank of Scotland)	0.6%	0.9%	0.8% 1.0%
		For January Provided by: Halifax Bank Of Scotland Official Release: PDF Prices 3m/y: 3.6%, pr. 1.1% (Dec), -1.6% (Nov), -4.7% (Oct), -7.4% (Sep), -10.1% (Aug), -12.1% (Jul), -15.0% (Jun), -16.3% (May), 17.7% (Apr), -17.5% (Mar), 17.7% (Feb) Avg. Price (s.a.): £169,777, pr. £169,042 (Dec), £167,451 (Nov), £165,528 (Oct), £163,487 (Sep), £160,973 (Aug), £159,623 (Jul), £157,713 (Jun), £158,565 (May), £154,716 (Apr), £157,326 (Mar) From the Release: "House prices rose by 0.6% in January. This was the seventh successive monthly increase and takes the average price to 9.9% above its trough in April 2009. January's rise, nonetheless, was more modest than in any of the previous six months. The marked reduction in interest rates over the past 15 months has, from a low base, boosted housing demand from those with a sufficient deposit to enter the market. Increased demand has combined with a low supply of properties available for sale to push up prices. There are some signs that more people are putting their homes on the market. A further increase in the supply of property is possible over the coming months, which would help to curb upward pressure on prices. Overall, our current view is that house prices will be flat during 2010."
2/4	7:00am	BOE Interest Rate Statement	0.50%	0.50%	0.50%
		Provided by: Bank of England Official Release: Statement From the Release: "In the light of the Committee’s latest Inflation Report projections and in order to keep inflation on track to meet the 2% inflation target over the medium term, the Committee judged that it was appropriate to maintain Bank Rate at 0.5% and its stock of purchases of government and corporate debt financed by the issuance of central bank reserves at £200 billion. The Committee noted that this stock of past purchases, together with the low level of Bank Rate, would continue to impart a substantial monetary stimulus to the economy for some time to come. The Committee will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them."
2/5	4:30am	Producer Price Index Output	0.4%	0.3%	0.5%
		Monthly Change for January Provided by: Office of National Statistics (ONS) Previous Release: HTML Output y/y: 3.8%, pr. 3.5% (Dec), 2.9% (Nov), 1.7% (Oct), 0.4% (Sep), -0.4% (Aug), -1.3% (Jul), -1.2% (Jun), -0.3% (May), 1.2% (Apr), 2.0% (Mar), 3.0% (Feb), 3.5% (Jan), 4.7% (Dec) Output Core m/m: 0.3%, pr. 0.7% (Dec), -0.1% (Nov), 0.3% (Oct), 0.5% (Sep), 0.2% (Aug), 0.5% (Jul), -0.6% (Jun), 0.2% (May) Output Core y/y: 2.5%, pr. 2.6% (Dec), 2.0% (Nov), 2.0% (Oct), 1.4% (Sep), 0.7% (Aug), 0.2% (Jul), 0.1% (Jun), 1.2% (May)
2/5	4:30am	Producer Price Index Input	2.0%	0.9%	0.6% 0.1%
		Monthly Change for January Provided by: Office of National Statistics Input y/y: 8.4%, pr. 7.4% R+ (Dec), 4.0% (Nov), 0.1% (Oct), -6.5% (Sep), -7.5% (Aug), -12.1% (Jul), -11.0% (Jun), -9.4% (May), -5.0% (Apr), -0.4% (Mar), 0.5% (Feb), 1.5% (Jan), 4.3% (Dec)
2/8	7:01pm	BRC Retail Sales y/y			4.2%
		For January Provided by: British Retail Consortium (BRC) Previous Release: HTML DOC
2/8	7:01pm	RICS House Price Balance		28%	30%
		For January Provided by: Royal Institute of Chartered Surveyors (RICS) Previous Release: HTML PDF
2/9	4:30am	Trade Balance		-6.6B	-6.8B
		Visible Trade Balance for December Latest Release Provided by: National Statistics Office Current Release: HTML Total Bal.: pr. -£2.9B (Nov), -£3.2B (Oct), -£3.0B (Sep), -£2.3 (Aug), -£2.4B (Jul), -£2.4B (Jun), -£1.9B (May), -£3.0B (Apr), -£2.5 (Mar), -£3.25B (Feb), -£3.58 (Jan), -£3.61 (Dec), -£4.47B (Nov)
2/10	4:30am	Manufacturing Production		0.4%	0.0%
		For December Provided by: Office of National Statistics (ONS) Previous Release: PDF y/y: pr. -5.4% (Nov), -7.8% (Oct), -9.8% (Sep), -11.3% (Aug), -10.1% (Jul), -11.7% (Jun), -12.7% (May), -12.7% (Apr), -12.9% (Mar), -13.8% (Feb), -12.8% (Jan), -10.2% (Dec)
2/10	4:30am	Industrial Production		0.2%	0.4%
		For December Provided by: Office of National Statistics (ONS) Previous Release: PDF y/y: pr. -5.4% (Nov), -7.8% (Oct), -9.8% (Sep), -11.3% (Aug), -10.1% (Jul), -11.7% (Jun), -12.7% (May), -12.7% (Apr), -12.9% (Mar), -13.8% (Feb), -12.8% (Jan), -10.2% (Dec)
2/10	5:30am	BOE Quarterly Inflation Report
		Provided by: Bank of England Previous Release: HTML (overview) PDF (full report) Governor's Opening Remarks (previous release): PDF
2/10	8:30am	NIESR GDP Estimate			0.3%
		For January Provided by: National Institute of Economic and Social Research Previous Release: PDF
2/12	5:00am	Leading Index			0.9%
		For December Provided by: Conference Board Previous Release: HTML PDF Coincident Index: pr. 0.1% (Nov), 0.1% (Oct), 0.1% (Sep), -0.1% (Aug), 0.1% (Jul), 0.1% (Jun), -0.3% (May), 0.0%, (Apr), -0.3% (Mar), -0.3% (Feb), -0.3% (Jan), 0.1% (Dec), -0.2% (Nov)
2/14	7:00pm	Rightmove House Price Index
2/16	4:30am	Consumer Price Index y/y
2/16	4:30am	DCLG House Price Index y/y			0.6%
2/17	4:30am	Claimant Count Change
2/17	4:30am	Unemployment Rate
2/17	4:30am	BOE Meeting Minutes
2/17	4:30am	Average Earnings Index and Bonus q/y
2/17	6:00am	CBI Industrial Trends Orders
2/18	4:30am	Public Sector Net Borrowing
2/18	4:30am	M4 Money Supply
2/19	4:30am	Retail Sales m/m

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Central Bank Watch - Latest Bank of England Decision

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Central Bank Watch - Bank Officals' Comments

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November 29 (BOE Governor King) -- Bank of England Governor Mervyn King said today the central bank will offer financial institutions emergency funds to prevent a renewed increase in money-market interest rates from hurting economic growth.

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Economic and Financial Profile

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Credit Crunch Hits UK Economy:

The UK economy saw strong growth recently, and some inflation, prompting the central bank to raise rates from 4.5% to 5.75% from July of 2006 to July 2007. Unemployment is at record lows and the services sector is growing rapidly. The bank was projecting that growth would moderate nicely in 2008, letting the bank raise its rate again in early 2008. Then, on August 9th, the world's financial markets experienced a shortage of credit causing injection of funds into the system. The Bank of England did not intervene until Northern Rock, needed to be bailed out. Other economic news related to losses as a result of the credit crisis have turned the central bank dovish and in their Nov. 14th Inflation Report, it signaled that rates would come down to 5.25% next year.

With the onset of the credit crunch, the housing sector, which had been a strong vehicle of growth in the UK, has begun to wobble. Prices have been falling in several indicators, and higher costs for loans will shrink the potential buyers. Business investment may also take a hit. The UK economy is set to report 2% growth next year after a 3.5% measure projected for 2007.

Carry Trade:

The Pound is used as a destination for carry trade, as its higher yields attract investments which are funded though borrowing money in low interest rate currencies such as the Yen and Swiss Franc. When global stocks are doing well, traders buy the GBP/JPY, when global stocks fall, so does the GBP/JPY. The last two years saw a strong climb of about 52 yen, however Augusts' turmoil in financial markets sent the pair reeling. More recent financial news in November have prompted a second, or third (if you count early '07) round of Pound selling.

This figure is a weekly chart, of the GBP/JPY pair. Prices moving upward favor the strength of the Pound (the top currency in the GBP/JPY quote). When prices move down they favor the Yen (the bottom currency in the pair).