Sterling pauses for a rest

Yesterday’s markets

18th October 2016

  • EUR Final CPI y/y: 0.4%
  • CAD Foreign Securities Purchases: 12.74B
  • USD Empire State Manufacturing IndeX: -6.8
  • EUR ECB President Draghi Speaks
  • EUR German Buba President Weidmann Speaks
  • AUD Monetary Policy Meeting Minutes

Yesterday, Sterling took a breather after an extremely volatile few weeks. The Pound has continued its weakening trend of late with GBP/EUR flirting with a key psychological level and GBP/USD finding support at the three decade low. The currency remains unstable as discussions of a hard Brexit continues to inject uncertainty into the currency. The latest reports from the Financial Times suggest that the UK could continue to pay into the EU budget in return for access to the single market. 

In other news, could we finally be at the beginning of the end for ISIS? An operation in Iraq to regain ISIS stronghold Mosul began over the weekend. Iraqi and Kurdish troops are now advancing with US air support to Mosul (Northern Iraq’s most populous city). The military action is provoking disagreements between allies already at loggerheads over Syria. 

Today’s markets

17th October 2016

  • USD Core CPI m/m
  • CPI m/m
  • GBP PPI Input m/m
  • GBP RPI y/y
  • CNY Fixed Asset Investment ytd/y
  • CNY NBS Press Conference

Inflation comes into focus as the UK and the US release their figures. Firstly, the UK publish the yearly CPI gauge. With Sterling recently crashing to 31 year lows, prices are expected to jump to 0.9% from 0.6%.  If seen, this will raise the question of the BoE’s next move and whether it will see the MPC members look to raise rates rather than cut them again. From across the pond the monthly CPI number is also due to increase to 0.3% from the previous month’s 0.2%. A number higher than this could see the Greenback strengthen, as the quicker inflation pushes towards the Fed’s goal of 2%.