15/11/2017 - UK Inflation Remains Steady

GBP

The UK’s  inflation figure unexpectedly held steady in October, raising fresh questions about how fast the central bank will follow up on this month’s interest rate hike. The annual rate of consumer price inflation was unchanged from September’s five-and-a-half-year high of 3.0 percent. While inflation in many developed countries remains weak, in Britain it has surged from just 0.5 percent at the time of the June 2016 vote to leave the European Union as the fall in the pound pushed up the cost of imported goods.  Most economists polled earlier this month said they did not expect the Bank to raise rates again until 2019. However financial markets are slightly more hawkish having priced in no increase until late 2018.October’s data showed that lower fuel price inflation was offset by the biggest rise in food prices since September 2013.
 
Yesterday David Davis committed to protecting talent within financial services after Brexit, giving his clearest indication of the government's vision for the sector to date. Speaking at an investment bank this morning  the Brexit secretary set out his vision of the City's future relationship with the EU after March 2019, based on three key planks: protecting financial stability, ensuring consumer protection and supporting the system built since the 2008 crash. Davis added "Protecting the City  and the contribution it makes to communities and economies right across Europe  is a responsibility not just for the UK but for Europe as a whole”

EUR

Yesterday the European Union statistics office, confirmed a preliminary estimate that euro zone gross domestic product (GDP)grew 0.6 percent from July to September from the previous quarter and on a year on year basis was 2.5 percent higher. The figure coming in higher than the 2.3 percent year-on-year rate for the U.S. economy, and thus far is on course for the best year for Europe since financial markets crashed a decade ago. 
 
The strong growth was powered by Germany, driven by buoyant exports and rising company investments in equipment. German GDP rose 0.8 percent on the quarter, beating a consensus forecast of 0.6 percent, which was also the second-quarter growth rate. France grew 0.5 percent on the quarter and 2.2 percent in annual terms and the third biggest economy, Italy beat expectations with a 0.5 percent quarterly, and 1.8 percent annual growth, supported by exports and domestic demand.

Key Announcements

09:30- GBP: UK Unemployment Rate 3M Sept – expected to be unchanged at 4.3%
 
13:30- USD: US Retail Sales (Oct) expected to be higher at 1.6% from 0% change in September
 
13:30- USD: US CPI (Oct) YoY expected to be higher at 2.0% from 2.2% change in September