Sterling sky rocketed yesterday as Prime Minister Theresa May’s Brexit plans helped support the Pound. GBP/USD and GBP/EUR soared through key resistance levels throughout the day, with GBP/USD nearing its biggest daily gains since 2008. PM May unexpectedly announced that the UK Parliament will have a final vote on the Brexit deal. This news sent Sterling higher yesterday. May was also clear that the UK would be exiting the single market and would not seek partial membership of the EU, however these pieces of news were priced in before the event and therefore the reaction to this was relatively muted.
Moving onto the economic docket where a key piece of inflation data was released from the UK. UK consumer price index exceeded economists’ consensus yesterday posting 1.6%, its highest reading since September 2014, as inflation gets closer and closer to the Bank of England’s 2% target. UK RPI (retail price index) and HPI (house price index) also beat expectations yesterday adding to the Pound's bullish day.
Inflation figures dominate the docket today as the Eurozone and the US release their yearly figures. First the Eurozone, where inflation is due to remain constant at 1.1%, and proving that the ECB policy seems to be working as it holds steady above 1%. From the US, the yearly figure is anticipated to move up again to 2.1% and up to 0.3% on the month, thus starting to put pressure on the Fed to act as it goes above their 2% goal. From the UK, labour data hits the wires this morning with the unemployment rate to remain at 4.8% and wages to show a slight increase.
Have a good day.