The Eurozone’s struggles continue

Despite their PM’s stepping down and huge debts being paid back, Italy and Greece remain in a position of economic crisis, while contagion seems to be spreading to triple A sovereigns such as France!

The only bonds that seem to currently be attractive are the UK’s, which should say a lot for Sterling, however fails to be reflected by its rate.

While CPI came out lower yesterday, it was well above the target of 2%. Today we eagerly await the BoE inflation report which will provide Mr Kings views on the way forward, and investors will be listening out for any inclination of a rate increase. Given the current situation that many families are still struggling due to the increasing costs of fuel, heat and food it is unlikely that the BoE will add to that pressure.

BoE Inflation Report

Even prior to the release of the BoE report today, GBP/USD is struggling and losing nearly 400 pips this week alone. The report can only further add to the woes and spark a fresh bear run; the impact will surely be increased later on the GBP.

Economic data

Germany showed a GDP growth of 0.5% as reported by the Federal Statistical Office (Destatis); this growth however, will have little impact on the Euro due to the ongoing spiral of worry in Italy.

UK CPI (YoY) is to be released later today with predicted negative results, results which will impact the GBP as CPI annual inflation stood at 5.0 per cent in October 2011, down from 5.2 per cent in September.The results for the UK Retail Price Index (MoM) (Oct) are predicting that the October index remained flat.

  • The UK Claimant Count Rate is due out, with consensus predicting an increase from 17.5k to 21k.
  • The UK ILO Unemployment Rate (3M) is expected to reveal a further increase from 8.1% to 8.2%.
  • US CPI Ex Food & Energy (YoY) is predicting an increase from 2.0% to 2.1%.
  • US CPI (YoY) is expecting a lower reading of 3.6% from the consensus, compared to its previous reading of 3.9%. 
  • US Industrial Production (MoM) is predicting a minor increase from 0.2% to 0.4% by the consensus.

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