UK GDP and Eurozone CPI in the limelight – Lloyds Bank

In view of the analysts at Lloyds Bank, the release of Eurozone CPI and UK GDP data will garner maximum investors’ attention in today’s European session.

Key Quotes

“Eurozone consumer price inflation has risen sharply in recent months, reaching 2.0%y/y in February. This has been driven primarily by energy prices, while ‘core’ inflation, excluding food and energy, has been much more stable. In March, we believe the figures will be distorted by the later timing of Easter this year compared with 2016. As such, we forecast a temporary drop in ‘core’ CPI to 0.7%y/y and a decline in the headline rate to 1.8%y/y. Yesterday’s lower than expected outturns for both Germany and Spain suggest that inflation may fall even more sharply than forecast.”

“ The 2nd reading of UK GDP for 2016Q4 saw quarterly growth revised up to 0.7% q/q. Timelier data for the construction sector suggest the possibility of a further uprating of today’s third estimate for Q4 to 0.8%. However, of more relevance for the picture moving forward will be January services output. An outturn close to the consensus expectation of 0.2% will point to the likelihood of GDP growth remaining above trend in 2017Q1.”  

“The UK’s current account deficit for 2016Q3 at 5.3% of GDP was close to its largest ever. This is set to have shrunk sharply in Q4, driven by a transient improvement in the trade balance for precious metals and a narrower income deficit. We expect a balance of £15.7bn, or 3.2% of GDP.”

“In the US, the Fed’s preferred inflation measure the PCE deflator is expected to have moved above the 2% target in February, but ‘core’ inflation is forecast to be unchanged at 1.7%y/y. February consumer spending is likely to be relatively subdued and consistent with a slowdown in expenditure growth compared to 2016Q4.”