UK GDP and Bank of England minutes preview

Tomorrow sees the release of the UK's Office of National Statistic's preliminary estimate for Q4 2011 Gross Domestic Product, with the consensus expectations being for a fall of 0.1 percent, quarter-on-quarter. Whether the figure ultimately turns out to have been even -0.5 percent or +0.5 percent will not make a great deal of difference to the virtually all-pervading gloom which has settled over the market with regard to the UK's economy. What a negative figure might do though is spur members of the Bank of England's Monetary Policy Committee (MPC) on to engage in further quantitative easing (QE) when they meet on February 8 and 9.

Bank of England MPC minutes
Tomorrow will also see the release of the minutes of the MPC's January meeting and these may shed some light on the likelihood of the introduction of further QE next month. Their last tranche of QE, to the tune of £75bn, should be completed next month and this may influence their decision, however it was clear from the last minutes that developments across La Manche, in the Eurozone, will be their main focus and one can expect this to be a dominant theme once again.

With signs that the European Central Bank's massive introduction of liquidity into the banking system has been finding its way into at least the short-end of distressed sovereign bond markets, with the Euro stabilising, and with interbank borrowing costs falling, (along with other measures of market stress), my bet would be that they will keep their powder dry in February and move in March in the absence of a miraculous change in the landscape.