GBP
Ahead of today’s headline inflation figure for the UK, yesterday’s papers
speculated that the quarterly report is likely to cement the view that interest
rates will remain on hold at 0.5% until well into 2015, after the
UK general election. Earlier this year a hike had been expected as
soon as this month but stagnating wages and low inflation, added to the effect
of weakness in the Eurozone, persuaded the Bank to keep the figure at record
lows. 

GBP
Ahead of today’s headline inflation figure for the UK, yesterday’s papers
speculated that the quarterly report is likely to cement the view that interest
rates will remain on hold at 0.5% until well into 2015, after the
UK general election. Earlier this year a hike had been expected as
soon as this month but stagnating wages and low inflation, added to the effect
of weakness in the Eurozone, persuaded the Bank to keep the figure at record
lows. 

USD
Despite the US being on a bank holiday for Veterans Day, in yesterday’s news
Boston Federal Reserve bank president Eric Rosengren discussed the Feds fight
for higher inflation. He believes the Fed should fight low inflation as
vigorously as it would a too rapid run-up in prices or risk the same sort of
prolonged slow growth plaguing Japan and Europe. Failure to get inflation
to the Fed’s 2 % target, raised the risk that investors and consumers would
slip into deflationary thinking, changing their spending and investment
patterns in ways that would further undermine growth.

He repeated his call for the Fed to remain patient in raising rates until it is
more certain that inflation will rise to the Fed’s target after last month
ending one of its major crisis response programs when it stopped adding to its
monthly holdings of Treasury bonds and mortgage-backed securities. 

EUR
Just days before Germany’s much anticipated third quarter gross domestic
product (GDP) data is released Friday, the chair of the German Banking
Association, Juergen Fitschen, yesterday warned that the euro zone’s largest
economy has lost its competitiveness and is on the brink of a recession.He said
that it was “undeniable that we have slowed down recently.”
Fitschen’s comments came amid other severe critiques of the German economy and
outlook, just days before the headline figure. 

Analysts will be keeping an eye on the GDP figure as second quarter data
in August showed Germany’s economy had lost momentum, contracting for the
first time in over a year. 

Key
Announcements:

09:30 GBP: ILO Unemployment Rate 3M (Sept) expected to fall from 6.0% to
5.9%   
10:30 GBP: BoE releases their quarterly inflation
report    

Our dealers are available via e-mail ([email protected]) or by phone (020 7220 8181).