UK gilts nearly flat as investors await Q4 economic growth, BoE Governor Carney’s speech

The UK gilts remained nearly flat Thursday as investors wait to watch the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on January 26, besides the Bank of England (BoE) Governor Mark Carney’s speech, due on the same day for further direction in the debt market.

The yield on the benchmark 10-year gilts, hovered around 1.40 percent, the super-long 30-year bond yields climbed nearly 1/2 basis point to 1.89 percent and the yield on the short-term 2-year traded flat at 0.58 percent by 08:20GMT.

The outlook for the UK growth remains rather muted for the Bank of England that sees the UK economy operating at its full potential output driven by the labor market tightness rather than the productivity improvement. This is leaving the potential output vulnerable to swings of the labor market condition, especially in light of Brexit related uncertainty, FX Street reported.

In fact, the UK economy was the only major G7 economy to experience the growth outlook downgrade in the latest issue of the World Economic Outlook from the International Monetary Fund published this Monday. The IMF now expects the UK economy to grow by 1.5 percent y/y in both 2018 and 2019, down 0.1 percent from the previous forecast for 2019.

Meanwhile, the FTSE 100 traded 0.05 percent lower at 7,640.50 by 08:25GMT, while at 08:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 40.05 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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