02/11/16 - Exporters Feel Benefit of Weaker Pound

GBP

The  IHS Markit's Purchasing Managers Index showed input prices rose to their highest level in five years, nearing a record high since the survey first began tracking business costs back in 1992 However the pound's fall threatens inflation-adjusted output and business margins

 

Analysts expect the Bank of England to raise its inflation forecasts in its new quarterly projections to be released alongside its interest-rate decision on Thursday, testing the central bank's appetite to overshoot its 2 percent target next year, after years of sitting well below this level.

 

The Purchasing Managers Index, eased to 54.3 in October. While that's down from 55.5 in September, the figure remains above its pre-referendum level and the historic average, suggesting export volumes have received a boost from the fall in  sterling.

 

USD

US manufacturing saw a stronger than expected October. The Institute of Supply Management's purchasing manager's index (PMI) came in at 51.9 for the month, above expectations of 51.7 and up from the prior month's 51.5.
 

One analyst stated that "After rebounding out of contractionary territory in September, the sustained advance in the ISM manufacturing PMI helps to confirm that the August deterioration was a short-lived blip,"
 

In a separate report  on Tuesday, Markit Economics' PMI came in at 53.4 for the month of October — the highest level for a year. This number is above economists' expectations of 53.3, and an uptick from the earlier flash reading of 53.2.

Factories benefitted from rising domestic and export sales, driving output higher as well as gains in output and new orders.

 

Key Announcements

09:30 – GBP: UK PMI Construction (Oct) expected to fall from 52.3 from 51.8

 

18:00- USD: Fed Interest Rate decision Expected to remain unchanged at 0.5%

 

18:00- USD: Fed Monetary Policy Statement