GBP
Britain’s inflation rate returned to negative territory for only the second
time since 1960, reflecting weak price pressures that the Bank of England has
warned will persist into 2016. Consumer prices fell an annual 0.1 percent after
stagnating in August. The ONS said that a smaller than usual rise in clothing
prices, and falling motor fuel prices, were the main contributors to the drop
in the rate. The CPI rate has been at zero or close to zero for most of this

GBP
Britain’s inflation rate returned to negative territory for only the second
time since 1960, reflecting weak price pressures that the Bank of England has
warned will persist into 2016. Consumer prices fell an annual 0.1 percent after
stagnating in August. The ONS said that a smaller than usual rise in clothing
prices, and falling motor fuel prices, were the main contributors to the drop
in the rate. The CPI rate has been at zero or close to zero for most of this
year. It was last in negative territory in April.

Weak inflation data will reinforce the view that the BOE is some months away
from raising its benchmark interest rate from a record-low 0.5 percent. The BOE
said last week that its near-term outlook for inflation had weakened since
August and that price growth will probably stay below 1 percent until spring
2016, well below its 2 percent target. David Kern, chief economist at the
British Chambers of Commerce, said they expected inflation to remain at or
below 0% for most of this year. “Our forecast is that annual CPI inflation
will start to creep upwards early in 2016, but will remain below the 2% target
well into 2017,” he added.

EUR
The ZEW Indicator of Economic Sentiment for Germany has further declined in
October . Decreasing by 10.2 points compared to the previous month, the index
now stands at a level of 1.9 points. This decline is much sharper than
anticipated with a forecasted figure of 6.1. This is the lowest level it has
been since this time last year. ZEW President  said. “The exhaust gas
scandal of Volkswagen and the weak growth of emerging markets has dampened
economic outlook for Germany. However, the performance of the domestic economy
is still good and the Euro area economy continues to recover. This makes it
rather unlikely that the German economy will slide into recession.”

Consumer prices in Germany in September 2015 were on the same level as in September
2014. The inflation rate  fell to 0.0% in September 2015 from 0.2% in
the previous month. The low inflation rate was due mainly to the decrease in
energy prices. Eurostat first estimate states the Eurozone economy grew by 0.3%
which marks a slight slowdown from the 0.4% registered in the first quarter.

Key Announcements
09:30 – GBP:  Average Earnings Index 3m/y – expected to increase to
3.1% from a previous reading of 2.9%
09:30 – GBP: Claimant Count Change – expected to decrease to -2.3K from a
previous reading of 1.2K
13:30 – USD:  Retail Sales m/m – expected to remain the same at 0.2%