Expectations from ECB Monetary Policy Meeting & US and UK Q3 GDP figures

October 25, 2017

Several big events are coming up this week. Follow the market with Orbex!

Expectations from ECB Monetary Policy Meeting & US and UK Q3 GDP figures

This article is originally referred from Orbex Forex Market Research

This week will see central bank meetings that will include the Bank of Canada, the ECB and the Swedish Riksbank.

However, overshadowing the meetings will be the ECB which is expected to announce its tapering decision at this month’s meeting.

On the economic front, Australia will be releasing the quarterly inflation report while the preliminary GDP numbers from UK for the third quarter will be coming out.

On Friday, the initial GDP numbers from the U.S. for Q3 will be released.

Expectations mount for ECB to taper

The European Central Bank’s monetary policy meeting this week comes with high expectations from the markets.

Following the broad based improvement in the Eurozone economy and with inflation starting to push higher at a steady trend, the ECB is expected to make its decision on tapering its bond purchases this week.

In the September ECB meeting, officials said that the decision will be taken at the October meeting, setting the stage for the ECB’s announcement.

Currently, the markets are expecting to see the ECB announce a tapering worth 30 billion euro.

This will bring down the ECB’s bond purchases to just 40 billion euro which is half the amount that it started when the central bank began its quantitative easing program.

The tapering is expected to go into effect from January 2018.

However, in the past week, officials were seen making cautious statements.

The ECB president, among other officials said that considerable amount of accommodative monetary policy was still needed.

It will be left to see how the ECB will steer its monetary policy this week as Draghi and team will have to maneuver expectations while ensuring that the exchange rate does not appreciate rapidly.

Initial Q3 GDP figures from US and the UK

This week will see advanced GDP figures for the third quarter coming out from both the United States and the United Kingdom.

The data will offer preliminary clues into how both the economies fared.

The GDP growth for the United States is expected to show a 2.5% increase on the third quarter.

This was slightly slower than the 3.1% increase that was registered in the second quarter.

However, with the data being only preliminary there is scope for the GDP data to be revised higher.

But the impact of hurricanes especially in the months of August and September brings the risk of a downside revision at later stages.

For the UK, GDP growth is expected to remain steady at 0.3% in the third quarter. While this is an optimistic view, there is scope for GDP activity to decline further.

Original Source: Orbex Forex Market Research

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