13/10/2017 - Pound Sold Off After Brexit Talks Stall 

GBP

The pound sold off late on Thursday after Brexit talks appear to be deadlocked over money, the EU’s Michel Barnier said on Thursday. He ruled out discussions on future trade being launched by EU leaders next week but spoke of possible progress by December. Barnier and Brexit Secretary David Davis, told reporters there had been some progress this week on the other two issues around Britain’s March 2019 withdrawal from the bloc on which the EU demands “sufficient progress” before it will agree to discuss a transition and future relationship. 

Barnier made clear, proposals on expatriate citizens’ rights and the Irish border still failed the EU test, while London’s refusal to spell out a detailed cash offer was “very worrying” for business Davis announced a streamlined new system for the 3 million EU citizens in Britain to claim residence rights, answering EU concerns, and said he expected good further progress on other issues.

EUR

President of the ECB Mario Draghi Bank defended  his pledge to keep interest rates at rock bottom on Thursday. Draghi, said the pledge to maintain interest rates at their current, record-low level “well past” the end of its bond-buying program was very important for keeping borrowing costs at bay. However the ECB is widely expected to reduce the rate of their monthly bond buys from the current 60 billion euros .

ECB chief economist Peter Praet, also outlined that  the euro zone’s economy was now growing at a brisk pace but warned this was still not being reflected in inflation  data. He said “We are undoubtedly experiencing a solid, broad-based and resilient economic recovery that is contributing to a narrowing of the output and unemployment gaps. But there still appears to be a disconnect between growth and inflation.”

Key Announcements

13:30- USD: US Retail sales (Sept) expected to be higher at 1.7% from -0.2%

13:30- USD: US Consumer Price Index (YoY) Sept higher at 2.3% from 1.9%