The Pound tumbled over the weekend as it was announced 40 members of the Conservative party are set to sign a vote of no confidence in the current Prime Minister, Theresa May. This is only eight short of the amount required for a leadership challenge. The news comes as Brexit talks enter an important stage as the December EU Summit deadline is fast approaching. The Labour Party are hoping to join forces with the Tory rebels to make a change to the Brexit bill, ensuring the European Court of Justice still has a role during the transitional period, when the bill returns to the House of Commons tomorrow. The continued uncertainty saw the Sterling drop against its major counterparties.
The Prelim University of Michigan Consumer Sentiment report posted worse than expected at 97.8, falling from last month’s 13 year high of 100.7. Despite the bearish reading, this is still the highest reading since January this year, reiterating the American’s optimism towards the economy and employment. The report shows consumers expect to see inflation rise next year to 2.6 percent and the annual income to see a gain of 2.1 percent.
There is a quiet start to the week with no high tier data on the economic docket. The Bank of Japan Governor, Haruhiko Kuroda will be speaking about monetary policy at the University of Zurich.
Tuesday is set to be a volatile day with a raft of economic data releases and key central bank speeches. The first data release will be from the Eurozone’s largest economy; in the form of the German prelim GDP and the final CPI figures, expected to post 0.6% and 0%. Back in the UK, the CPI figure for October will be released, expected to post 3.1%. If this figure does post over 3%, Bank of England Governor, Mark Carney will be required to write a letter to Government explaining why inflation is above target and what the BOE will do to bring it back towards the targeted 2%. Across the pond, the US will release the PPI figure for October, forecasted to post 0.1%. Four Central Bank leaders, Janet Yellen, Haruhiko Kuroda, Mark Carney and Mario Draghi will be taking part in a panel discussion titled ‘At the heart of policy: challenges and opportunities of central bank communication’ at the Central Bank Communication Conference.
On Wednesday, the UK will release the Average Earning Index, expected to drop slightly from the last reading to 2.1%. The Claimant Count Change and Unemployment Rates will also be posted, forecasted at 2.4k and 4.3%. The BOE Deputy Governor, Ben Broadbent will be speaking at the London School of Economics to discuss Brexit and interest rates. Across the pond, the US will release their core CPI and Retail Sales figures, both expected to post 0.2%. Also released will be the Crude Oil Inventories.
The UK will release their Retail Sales figure for October on Thursday, expected to bounce back up from last month’s bearish -0.8% to a bullish 0.2%. BOE Governor, Mark Carney, is set to speak about economics and how the financial world affects your life at the Future Forum 2017 alongside other MPC members, Ben Broadbent, Jon Cunliffe and David Ramsden. Across the pond, the US will release their Unemployment Claims expected to post 236k as well as the Philly Fed Manufacturing Index, forecasted to post 24.3.
The week will end with ECB President Mario Draghi speaking at the Frankfurt European Banking Congress to deliver a speech titled ‘Europe into a New Era – How to Seize Opportunities.’ From Canada, the CPI figure is set to be released at 0.1%. The US Building Permit’s figure will be released, expected at 1.25m.