ECONOMIC DATA ANALYSIS BY LLOYDS TSB

Although last week’s MPC meeting passed without event, growing nervousness over the UK rate outlook continues to weigh heavily on sterling rate sentiment. Although last week’s MPC meeting passed without event, growing nervousness over the UK rate outlook continues to weigh heavily on sterling rate sentiment. The Dec-11 short sterling contract has fallen close to 40 ticks since the start of the year, as short-term inflation fears trump growing signs of an economic slowdown. After last week’s mixed external trade and industrial production data, we expect Q4 GDP growth (due 25th Jan) to slow to 0.2%q/q. Still, against the backdrop of surging pipeline price pressures (input prices rose 3.4% in December), it appears the market is not, for now at least, attaching much importance to this.