The Pound experienced several choppy trading sessions last week and has held gained ground going into the new week.
Brexit negotiations were center stage for the Pound last week, where the markets have been left to wait and see whether the EU is willing to except the UK’s offer for an additional 2-year transition period after Brexit.
This week is Inflation week which begins on Tuesday with the release of the Produce Price Index and Consumer Price Index. Expectations are for inflation to have topped 3% on an annual basis with a drop in monthly inflation from 0.6% in August to 0.3% for September. This is followed by a speech from Mark Carney from the Bank of England.
Wednesday gives us employment data in the form of the unemployment rate and average hourly earnings followed by the inflation report hearings by the UK’s Treasury Committee.
Thursday brings Retail sales data where the retail market is expected to have contracted in September with a reading of -0.2% in sales.
The week closes with public sector borrowing figures from the government on Friday.
Data from the USA on Friday all missed expectations but still point to a growing US economy nonetheless with chances of an interest rate hike in December at around 75%.
Retail sales showed a print of 1.6% in September from a dismal contraction of -0.1% in August. The expectation was for a reading of 1.7%.
Inflation data also missed expectations and came in at 2.2% for the Year versus an expected 2.3%. For the month inflation was 0.5% versus 0.4% a month before.
It is a quieter week for the US this week as the markets focuses on European inflation data.
Today we hear whether the Catalonian Prime Minister will declare independence from Mainland Spain. If he does declare independence then we expect the Government to invoke Article 155 of the constitution which represents the dismantling of the Catalan government. Something that could lead to civil unrest in the region.
Data points for the Eurozone include a speech from Vítor Constâncio, ECB vice president on Tuesday followed by Consumer Price Data a few hours later at 10.00 am. Expectations are for inflation to have held steady at 1.5% for the Year with a slight increase for September to 0.4% from 0.3% previously.
Wednesday kicks off with a speech from ECB President Mario Draghi from the “EU Extraordinary Economic Summit” where EU Prime Ministers and Presidents meet to discuss actions and plans to solve current problems that may affect the Union. Later in the day and closing the week for Eurozone data, we have 2 more speeches from the ECB’s Praet and Coeure.
9.00 am – Deadline for Catalonia to confirm if it has declared Independence or not
9.30 am – UK CPI (September): forecast to rise to 3.0% from 2.9% YoY and rise 0.3% MoM compared to 0.6% previously
11.00 am – Eurozone CPI (September, final): YoY expected to remain at 1.5% and MoM rising to 0.4%
11.15 am – Bank of England’s Mark Carney Speech
9.30 am – UK employment data: August unemployment forecast to flatline at 4.3%. Average earnings expected to rise 2% from 2.1% a month earlier
12.45 pm – ECB’s Peter Praet Speech
16.15 pm – ECB’s Benoit Cœure Speech
N/A – UK inflation report hearings
9.30 am – UK retail sales (September): sales expected to contract -0.2% MoM from 1% in August. YoY rate slows to 2% from 2.4%
09.30 am – UK Public Sector Net Borrowing (September) – Borrowing stood at £5.093 Billion in August, lower than previously estimated.
N/A – Fed’s Yellen Speech