Inflation boosts the Pound

Yesterday’s markets

19th October 2016

  • USD Core CPI m/m: 0.1%
  • USD CPI m/m: 0.3%
  • GBP PPI Input m/m: 0.0%
  • GBP RPI y/y: 2.0%
  • CNY Fixed Asset Investment ytd/y: 8.2%
  • CNY NBS Press Conference:

UK Inflation dominated yesterday’s price action. The consumer price index rose to its highest at 1% in September since November 2014. The Pound rose nearly 1% against the Euro and half a percent against the Greenback, bucking the Sterling trend of late. However, economists are still predicting the Bank of England to cut the main benchmark rate to a record low of 0.1% at November’s policy meeting.

 Across the pond, the US posted their main inflation indicator, CPI. The reading had less impact than forecast, posting as economists’ expected at 0.3%. Overnight, the world’s second largest economy; China posted two pieces of high tier data. Firstly, China’s economic growth continued to grow consistently as their GDP came at 6.7%, as expected for the third quarter. It has many economists questioning the accuracy of this reading, as this stable growth is unusual as other countries have never remained or seen such stable GDP growth rates. However, Industrial production failed to meet economists’ consensus of 6.4%, depreciating unexpectedly to 6.1% for September.

Today’s markets

18th October 2016

  • GBP Average Earnings Index 3m/
  • GBP Unemployment Rate
  • GBP Claimant Count Change
  • CAD BOC Rate Statement
  • AUD Employment Change
  • AUD Unemployment Rate

Overnight, China the second largest economy gave further insight into their growth prospects as the GDP is set to remain at 6.7% whilst Industrial production is due to increase to 6.4%. With demand slowing from China over the past year this has impacted the global growth and therefore all data from China is monitored for indications of a continued slowdown or possible growth. The UK’s labour market comes into focus as average earnings, claimant count and the unemployment rate are released. Unemployment and average earnings are anticipated to remain constant, but a rise in unemployment is expected to show a slight increase of 3.4k from 2.4k.