The Pound boosted as the markets opened last night, as Bank of England Deputy Governor, Dave Ramsden’s, stance on interest rate hikes looks like it has begun to change. As one of the two dissenters at the November BOE meeting, his hawkish comments in an interview on Sunday provided the markets with some support, that the BOE might need to raise rates quicker than originally thought if wage growth picks up. Ramsden commented ‘I see the case for rates rising somewhat sooner rather than somewhat later.’ The markets are predicating the BOE will raise rates at the May meeting.
Leader of the UK Labour party, Jeremy Corbyn has released his party’s approach to Brexit today. As the main opposition to UK Prime Minister, Theresa May’s government, Corbyn’s speech aimed at siding with the Tory rebels, in an attempt to defeat May’s strategy.
Corbyn sees Britain staying permanently within the Customs Union to avoid the need for a ‘hard border’ to be placed in Northern Ireland, and allowing free-flowing trade to continue between the bloc and the UK. Theresa May is scheduled to give an outline of her vision for the post Brexit relationship on Friday. It is expected that Theresa May will explain her three-basket approach. The three-basket approach is where different industries in the UK are treated differently when dealing with EU regulations.
Today sees a quiet start to the week, with no high tier economic data on the economic docket. European Central Bank President, Mario Draghi will be testifying on the monetary policy and inflation outlook before the European Parliament Economic and Monetary Affairs Committee. Across the pond, FOMC member, Randal Quarles will be delivering a speech at the National Association of Business Economics Policy Conference titled ‘An Assessment of the US Economy.’
Tuesday will start with the release of the German Prelim CPI and Spanish Flash CPI. The German reading is expected to post 0.5%, whilst the Spanish CPI is forecast to post 0.9%. President of the Deutsche Bundesbank, Jens Weidmann, will be speaking about the Bundesbank’s Annual Report. Weidmann is currently seen as the leading candidate to take over from Mario Draghi, when his term as President of the ECB ends in the final quarter of 2019. Across the pond, the US will be releasing the Core Durable Goods Order figure for January, which is expected to post 0.4%. Jerome Powell, Federal Reserve Chair, will be delivering his first testimony to Congress on the semi-annual Monetary Policy Report. The Conference Board will be releasing their Consumer Confidence report, expected to uptick to post 126.2.
The Eurozone at set to release their CPI Flash estimate on Wednesday, which is expected to drop slightly to post 1.2%. The Core CPI is forecast to remain stable at 1%. In the US, the Prelim GDP figure for Q4 of 2018 will be released. It is expected to drop to 2.5%. The Chicago PMI is forecasted to post 64.1 whilst the Pending Home Sales is expected to drop to 0.4%.
Manufacturing PMIs will be the focus of Thursday. The first ones to be released are from the Eurozone, with individual country readings from the largest economies, Germany, France, Italy and Spain. The Eurozone final Manufacturing PMI is expected to remain stable at 58.5, whilst Germany is expected to post 60.3, France 56.1, Italy 57.9 and Spain 54.8. Back in the UK, the UK Manufacturing PMI is forecast to remain relatively stable and post 55.1. In the US, Fed Chair, Jerome Powell will be testifying before the Senate Banking Committee on the semi-annual Monetary Policy Report. The ISM Manufacturing PMI will also be released, expected to remain static and post 59.
Markets will be focusing on the UK on Friday, as UK Prime Minister, Theresa May is set to speak on her visions for the UK’s post-Brexit relationship with the EU. Bank of England Governor, Mark Carney will be speaking on the evolution of money and emergence of cryptocurrencies at the Scottish Economics Conference. The UK are also set to release their Construction PMI, which is expected to uptick to 50.5, after a bearish 50.2 release last month. Back in the US, the University of Michigan will be releasing their revised Consumer Sentiment and inflation expectations. The Consumer Sentiment is expected to drop one point from the previous reading to 98.9.