User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday November 30, 2009 - 11:50:56 GMT
Lloyds TSB Financial Markets -

Share This Story:
| | Email

Economics Weekly - UK Q3 GDP breakdown raises concerns over rebalancing; Weekly economic data preview – Will Trichet signal the beginning of the end for the ECB’s extraordinary policy measures?

Economics Weekly -30 November 2009


UK Q3 GDP breakdown raises concerns over rebalancing



Data released by the ONS last week showed that UK Q3 GDP growth was revised up from a drop of 0.4% in the first estimate to -0.3% in the second. The main news for us, however, was not so much this modest upward revision, but rather the accompanying breakdown of Q3 expenditure. As we outline below, the composition has renewed concerns over the prospects for the UK economy and its ability to undergo a successful rebalancing.


The contributions to the quarterly and annual rates of UK GDP growth are shown in charts a and b. Despite a hoped for rebalancing away from domestic demand towards net exports, the UK’s net trade position deteriorated sharply in Q3. UK Q3 import volumes outpaced export volumes by almost 1 percentage point. Part of the reason for the relative resilience of UK imports was the car scrappage scheme, which reportedly led to a surge in car imports in Q3. This also helps explain why consumer spending, which was flat on the quarter, was slightly better than expected, given earlier expectations of another decline (but it does not explain why retail sales were also higher).


Although net exports deducted from Q3 growth, over recent years the UK’s net trade position has improved markedly. Since 2006, the contribution of net exports to UK annual GDP growth has trended steadily higher, while contributions from fixed investment and consumer spending have dropped sharply (see chart b). On closer inspection, however, the improvement in net trade has not been as encouraging as the headline figures suggest. This is because the improvement has been driven by a fall in imports - a natural, but potentially temporary, consequence of the downturn in domestic demand. Indeed, in the year to end Q3, export volumes declined by 11.7%. The only reason net trade contributed to annual growth was because imports declined by a sharper 12.9%. This is not the basis of a sustainable recovery.


The inability of the UK’s export performance to improve, despite the rise in global growth and the decline in sterling’s exchange rate is becoming an increasing concern. As chart c shows, our forecast for UK recovery in 2010 and 2011 relies heavily on a sustained improvement in the UK’s external trade balance. If this fails to occur, there is a real risk that the UK could undergo a double-dip. This is because we believe there is little prospect of domestic demand improving substantially, given ongoing credit constraints, the desire of the private sector to repair balance sheets and the fiscal tightening anticipated over the coming years.


The challenges the UK faces are all the more pressing given the recent progress made by other developed economies. While the UK was still formally in recession last quarter, France and Germany emerged from their downturns in Q2, while the US recorded positive growth in Q3. The recoveries in these other economies, however, have been built on different foundations – some of which are likely to be sustainable, others less so.


For example, in the US, GDP grew by 0.7% in Q3. As chart d shows, the rise in US GDP growth was driven by an improvement in consumer and investment spending, and a rebuilding of stocks after the inventory liquidation sparked in late 2009 following the collapse of Lehman Brothers. Having made a positive contribution in earlier quarters, net external trade depressed US growth in the third quarter, as imports surged. As in the UK, the rise in imports appears to have been exaggerated by a sharp rise in car imports due to the US ‘cash for clunkers’ program. Looking ahead, we expect US external trade to resume making a positive contribution to US growth. Like the UK, however, the import sensitivity of the US economy to consumer spending raises a question mark over whether this hoped for rebalancing will occur.


External trade has also played a key role in the economic performances of Germany and France over the past two quarters. Export volumes in both economies rose in the third quarter, although the impact in Germany was offset by a sharp rise in imports – again largely due to the impending closure of a government car purchase incentive scheme. Although export volumes in both economies have picked up, they remain well below the peaks recorded in 2007 and early 2008. As the world’s largest exporter, Germany has been disproportionately impacted by the fall in global trade and the decline in its competitiveness due to the strength of the euro. Indeed, the only reason German GDP rose in Q3 was due to marked, but most likely temporary, re-stocking (chart e). Given the upside risks to unemployment when German government wage subsidies are eventually withdrawn, the fortunes of the German economy over the coming years rest heavily on the prospects for world trade growth and the euro.


By contrast, the French economy has a more developed domestic demand base than Germany. It has also benefited from tax cuts introduced earlier. As such, France is less reliant on external trade. Nevertheless, net trade has played an important part in pulling the French economy out of recession over the past two quarters (see chart f). Looking ahead, the ability of the French economy to sustain growth without a continued improvement in external trade is questionable, particularly as earlier domestic stimulus starts to fade.


Although the magnitude and make-up of GDP growth in some of the major developed economies has differed over the past few quarters, what stands out is that a rebalancing in world growth and a recovery in world trade are essential if the recent improvements are to prove sustainable. Unfortunately, the recent performance of the UK economy raises doubts about whether it can rebalance without a further marked fall in the exchange rate. If the UK fails to capitalise on a recovery in world export markets, it will be all the more difficult for the economic recovery to prove enduring.

Adam Chester, Senior UK Macroeconomist


Editorial comments to:

Trevor Williams

Chief Economist

Lloyds TSB Corporate Markets

Economic Research

10 Gresham Street

London, EC2V 7AE

Tel: +44 (0)20 7158 1748


Weekly economic data preview –

30 November 2009


Will Trichet signal the beginning of the end for the ECB’s extraordinary policy measures?


The ECB press conference will attract more attention than usual this week, with financial markets waiting to see whether President Trichet confirms that the central bank is to cease its 12m Long-term Refinancing Operations after December. If so, the move will be interpreted as being the first step by the ECB in unwinding its unconventional policy measures. Meanwhile, in the UK, there has been a divergence of views on the MPC on the appropriateness of the most recent QE extension. MPC member Posen (who voted with the majority to extend the BoE’s Asset Purchase Facility by £25bn) speaks on Tuesday, while Chief Economist Dale (who voted against a further extension to the APF) speaks the following day. On the data front, there are a flurry of purchasing managers’ surveys released this week across the globe. Moves in the employment balances within the US reports and Wednesday’s ADP reading are precursors to Friday’s US labour market data. Here, we expect non-farm payrolls to decline by 160k in November and the unemployment rate to stay unchanged at its 26-year high of 10.2%. Until the unemployment rate shows a sustained downward trend, the Fed is not likely to raise interest rates. On Wednesday, the Fed’s Beige book is likely to characterize the gradual recovery in the US.


􀂄 In the UK, we expect both the manufacturing and services PMIs to post small declines to 53.3 and to 56.5, though clearly the readings are well above the fifty level, signifying expansion. As a consequence, we expect the level of the composite PMI recorded to date during Q4 to corroborate our expectation that the economy will exit recession in the current quarter - chart a. There are a number of housing releases to watch out for too. Lending to individuals data for October are released on Monday, as is the November Nationwide house price index. The Halifax also releases its house price index during the week. As for policy maker rhetoric, the

MPC’s Posen (who voted for the MPC’s £25bn extension to the APF) speaks on Tuesday, while Chief Economist Dale (who voted against the extension) speaks the following day.


􀂄 In the US, we forecast a small decline in the manufacturing ISM (Tuesday) to 54.8 in November from its three-and-a-half year high of 55.7, and a small rise in the non-manufacturing PMI (Thursday) to 51.5. With both ISM reports, moves in the employment balances will be closely watched, as the outturns will allow financial markets to firm up expectations for the non-farm payroll (NFP) report – chart b. The ADP employment estimate (Wednesday) will also provide further guidance. Our current expectation for Friday’s report is that NFPs will decline 160k in November, leaving the unemployment rate static at its 26-year high of 10.2%. The Fed releases its latest conditions of the nation report, the Beige book (Wednesday), which will be used as the basis of discussion for the FOMC meeting on 16 December. Four FOMC members are scheduled to speak this week (Chairman Bernanke, Plosser, Lacker and Bullard).


􀂄 Thursday sees the ECB rate decision, where it is expected to maintain the refinancing rate 1%. Of more significance will be whether President Trichet provides confirmation that the one-year Long-term Refinancing Operation (scheduled for mid-December) will be the last. If so, it will be interpreted as being the first step by the ECB in unwinding its unconventional policy measures. The press conference will also report the latest quarterly ECB staff projections. On the data front, small increases in both the manufacturing and services PMIs for the region are forecast (to 51.0 and 53.2 respectively), which will flag that the GDP in the region will probably expand in Q4 at the same (0.4%) rate recorded in Q3. Ahead of the ECB decision, Tumpel-Gugerell speaks (Tuesday), while Weber and Bini Smaghi are scheduled to speak (on Thursday and Friday respectively).

George Johns, UK Macroeconomist


Economic Research,
Lloyds TSB Corporate
10 Gresham Street,
London EC2V 7AE
0207 626 - 1500


Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.





Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 10 Sep 2018
AA 08:30 GB- GDP, Trade, Output
Tue 11 Sep 2018
AA 08:30 GB- Employment Decision
A 09:00 DE- ZEW Survey
Wed 12 Sep 2018
A 12:30 US- PPI
A 14:30 US- EIA Crude
A 18:00 US- Beige Book
Thu 13 Sep 2018
A 1:30 AU- Employment
AA 11:00 GB- Bank of England Decision
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
AA 12:30 US- CPI
Fri 14 Sep 2018
A 08:30 GB- GDP
AA 12:30 US- Retail Sales
A 13:15 US- Industrial Production
AA 14:00 US- prelim University of Michigan

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105