GBP

The
pound rose against all its peers yesterday after the Bank of England bought
forward the date they expect the UK unemployment rate to fall to 7% to the
third quarter 2015. As part of the BoE’s forward guidance plan, UK unemployment
needs to be 7% before the BoE decide to hike up interest rates. 

The
BoE also raised their GDP forecasts to 1.6% from 1.4% for 2013 and to 2.8% from
2.5% for 2014. 

GBP

The
pound rose against all its peers yesterday after the Bank of England bought
forward the date they expect the UK unemployment rate to fall to 7% to the
third quarter 2015. As part of the BoE’s forward guidance plan, UK unemployment
needs to be 7% before the BoE decide to hike up interest rates. 

The
BoE also raised their GDP forecasts to 1.6% from 1.4% for 2013 and to 2.8% from
2.5% for 2014. 

UK
data showed that the number of people filing for jobless claims fell more than
expected to 41,700 in October and the ILO unemployment rate in the three months
leading up to September fell to 7.6%, the lowest in three years. The data adds
to recent data that the UK recovery is well on its way.

EUR

Demand
for the euro dampened following data showing that industrial production fell
more than expected by 0.5% in September from a month earlier. 

The
euro also fell following comments made by ECB executive board member Peter
Praet that the ECB could cut interest rates to below zero or undertake
quantitative easing in order to lift inflation closer to its target of just
below 2%. 

USD

The
US dollar weakened against most of its counterparts following comments made by
Federal Reserve chairman nominee Janet Yellen. 

Yellen
stated that the US economy and job market were far short of their potential and
thus an improvement must be seen before the Fed pulls the trigger in reducing
quantitative easing. 

JPY 

GDP
figures for the third quarter showed that Japan’s economy grew slower in the
third quarter to 1.9% from a previous figure of 3.8%. As a result, GBPJPY is
now trading at a four year high. 

Today

After
sterling’s strong performance yesterday, further moves higher could well be
muted as UK retail sales data due for release today for the month of October
are expected to stagnate. 

GDP
figures from the Eurozone will be in focus this morning also with the growth
for the third quarter expected to decline marginally to 0.2%. Data already
released this morning has been mixed, with France contracting by 0.1% in the
third quarter and Germany’s economy expanding by 0.3%, in line with forecasts,
but lower than the second quarter’s growth. 

In
the US Janet Yellen is expected to make another speech in the afternoon and
data from the job market is expected to show that the number of people filing
for jobless claims is expected to fall by 6,000 from the previous week, which
may well give the US dollar some support. 

Key Announcements:

9.30am
– GBP – Retail Sales (Oct): Expected to stagnate at 0%. 

10.00am
– EUR – Gross Domestic Product (Q3): Growth expected to slow to 0.2%. 

13.30pm
– USD – Initial Jobless Claims: Expected to fall to 330,000.

13.30pm
– USD – Trade Balance (Oct): The deficit is expected to increase to US$39bn. 

15.00pm
– USD – Janet Yellen Speech.