US GDP Revised Lower

Public sector net borrowing in the United Kingdom nearly doubled the number from the prior month according to the latest data released by the ONS. November recorded £13.56 billion in borrowing versus the same month last year compared with October’s £6.75 billion. The figure was far higher than forecasts of £11.00 billion. The ONS pointed out that last year's numbers were boosted by fines of around £1.10 billion which spread over November and December after several banks were penalized by the Financial Conduct Authority for failures in their foreign currency operations. Excluding banks, borrowing rose £1.30 billion from last year to £14.20 billion in November. UK public finances still are not improving as quickly as Chancellor George Osborne expected, increasing the likelihood that he will have to introduce additional fiscal policy measures to achieve his goal of a budget surplus by 2019-20.

The US economy has showed additional advance in the third quarter with GDP value printing at 2.00%, higher than consensus expectations of 1.90%. The growth metric corroborates Federal Reserve Chair Yellen’s statement during the last press conference that the decision to raise rates was based on the Committee’s confidence in the economy. The latest round of positive economic data including consumer spending, business investment, rising employment, the decline in energy prices and a rise in Government spending have largely managed to offset the trade deficit as evidenced by the results.  Despite the offset though, most analysts predict that business inventories will remain relatively high and potentially serve as a drag on the fourth quarter growth.  The dollar continued to give back ground through the end of the trading session before rebounding overnight, pushing gold prices firmly below $1080.