Daily Market Report 19/02/2014

GBP

Inflation fell below the Bank of England's 2% target for the first time in more than four years in January, brightening the outlook for Britain's squeezed consumers.

The annual rate of inflation dipped to 1.9% last month from 2% in December, according to the Office for National Statistics, driven lower by prices of furniture and other household goods, alcohol and tobacco, DVDs and tourist attraction entry costs. This caused the pound to weaken off as it lowers the expectations that the Bank of England will raise interest rates in the medium term.

UK house prices increased 5.5% in January, although the London effect has skewed the headline figure showing an increase of 12.2%. Prices in Scotland showed the smallest increase as they prepare for a referendum vote rising just 0.5%

EUR

In Germany the ZEW monthly poll of economic sentiment dropped to 55.7 from 61.7 in February falling well short economists’ expectations of 63.2. It was the lowest reading since November. However the majority of surveyed financial market experts remain optimistic about the economy.

USD

US homebuilder confidence suffered its biggest ever drop in February, hit by the severe winter weather and worries about labour and building costs. The National Association of Home Builders/Wells Fargo index dropped from 56 in January to 46, the first time since May it was below the 50 level.

Today

We have a number of figures out of the UK with mortgage approvals; Bank of England minutes released from their rate announcement as well as December unemployment figures. In the afternoon in the US we have January Building permits and housing starts, both expected to show mixed figures.

Key Announcements:

09:30am – GBP – Bank of England Minutes.

09:30am – GBP – BBA Mortgage Approvals (Jan): Previously 46,500.

09:30am – GBP – ILO Unemployment Rate (3M) (Dec): Expected to remain at 7.1%.

13:30pm – USD – Building Permits (MoM) (Jan): Expected to fall to 980,000

13:30pm – USD – Housing Starts (MoM) (Jan): Expected to fall to 950,000

19:00pm – USD – FOMC  Minutes.