Daily Market Report - 26/01/2016

GBP

Kristin Forbes a voting member of the BoE monetary policy has said that wage growth is not yet enough to lift inflation but that it may not be far off. She said that if they regain the momentum they had last year we may see levels consistent with meeting the inflation target. The UK and US are not able to indefinitely add more jobs as they have been recently without wage growth. If Kristin is correct in her analysis this means that we may see a rate rise on the horizon, as wages grow and fuel cost-push inflation.

Also in the UK yesterday The Confederation of British Industry's (CB) headline total order books balance dropped to a score of minus 15 in January from minus seven in December. The export order balance dropped to minus 22 from minus 18. This is partly due to the GBP strength at the end of last year, however we may see a reversal in this as the GBP is now losing ground against all major currencies.

EUR

Yesterday evening  we had a speech by Mario Draghi, president of the ECB, in which he said "Meeting our objective is about credibility. If a central bank sets an objective, it can't just move the goalposts when it misses it". This indicates that he is prepared to implement more monetary easing in order to meet the inflation target. This echoes his last speech where he also indicated the same.
 

Key Announcements

GBP – 10:45: Mark Carney makes a speech