UK gilts flat ahead of Q4 GDP, December manufacturing production data; BoE’s Carney in focus

The United Kingdom’s gilts remained flat during Monday’s afternoon session, ahead of the country’s gross domestic product (GDP) for the last quarter of 2018 and December’s manufacturing production data, both scheduled to be released today by 09:30GMT respectively.

Also, Bank of England’s (BoE) Governor Mark Carney is due to deliver a keynote speech on the following day (Feb 12) by 13:00GMT which will provide further direction to the debt market.

The yield on the benchmark 10-year gilts, hovered around 1.147 percent, the super-long 30-year bond yields remained tad lower at 1.669 percent while the yield on the short-term 2-year jumped 2-1/2 basis points to 0.729 percent by 08:30GMT.

Britain’s preliminary GDP data estimate is expected to show that the quarterly pace of UK economic growth decelerated into year end. Already released monthly data has shown that the UK economy continued to grow in October and November, Lloyds Bank reported.

"However, we expect only a 0.1 percent rise for December, which, if realised, would mean that the economy grew 0.3 percent in Q4 – half the rate seen in Q3," the report added.

While today’s UK GDP report will offer some insight into the impact that the ongoing impasse in the Brexit negotiations is having on the economy, it is likely that sterling markets will remain more sensitive to any headlines regarding the prospect of a renegotiated deal being reached. On that front, UK Brexit secretary, Stephen Barclay, is due to meet with the EU’s Chief negotiator Michel Barnier today for further talks, Lloyds Bank further noted.

Meanwhile, the FTSE 100 remained nearly 1 percent higher at 7,125.57 by 08:35GMT, while at 08:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -50.25 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex