Daily Market Report - 13/11/2014

The Pound has fallen now to 14 month lows against the US Dollar. Given current conditions there could be further downside risk over the medium term.


First up in the morning yesterday for the UK were employment figures. The headline unemployment rate stayed the same as the previous month at 6%. However, the data shows that a record number of people are now in work as the jobless total fell 115,000 in the quarter to September.

Wage growth figures were released yesterday showing that wages excluding bonus' were up 1.3% in the three months to September. This is significant, as this is the first time in 5 years wage growth has been higher than inflation, signalling an end to the cost of living squeeze.

The main event yesterday in the UK was the Bank of England's Quarterly Inflation Report. Mark Carney stated yesterday that plunging commodity prices, the recent weak wage growth and slowing global growth has triggered a drastic change of view on their outlook for inflation. They now expect it to take 3 years to return to the banks 2% target.

GBP fell on the back of comments suggesting that the Bank of England expects to hold interest rates at 0.5% until around October next year. This is in contrast to the view held in August's inflation report where the Bank had been signalling that pre-election rise in February was most likely.

Growth in 2015 has been revised slightly lower to 2.9% from the banks August forecast of 3%. They also expect the unemployment rate to fall to 5.7% by the end of 2015, however, the nature of job creation (young and low skilled) will weigh on wage growth.

The only real piece of data out from the Eurozone yesterday was industrial production data for the whole of the Eurozone. YoY figures came in significantly above expectations at 0.6%, when it was forecast to slip by 0.3%.

Key Announcements:

09:30 EUR: ECB Monthly Report   
13:30 USD: Initial Jobless Claims, expected to rise to 280k
13:30 USD:Continuing Jobless Claims, expected to rise 2.35M

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