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Falling UK inflation inspires fresh pound losses

business-articlesFalling UK inflation inspires fresh pound losses
  • Below-forecast consumer price index drags pound lower
  • Euro benefits from positive monthly Eurozone industrial production
  • Surprise RBNZ interest rate decision triggers New Zealand dollar surge
Will resilient UK retail sales boost the pound?
October’s UK consumer price index proved weaker than forecast yesterday, with the headline inflation rate dipping from 1.7% to 1.5% on the year.
This disappointing showing encouraged bets that the Bank of England (BoE) could cut interest rates sooner rather than later, dragging the pound lower.
However, GBP exchange rates may return to a positive footing this morning if the latest UK retail sales data proves encouraging.
Evidence that consumers shrugged off political concerns and economic anxiety in October would bode well for fourth quarter growth.
Eurozone GDP could weigh on euro
An unexpectedly positive showing from the monthly Eurozone industrial production figure bolstered the euro yesterday.
However, with the German economy showing signs of a slowdown the mood towards the single currency could quickly deteriorate.
Any negative revision to third quarter Eurozone gross domestic product could put renewed pressure on the single currency this morning.
New Zealand dollar gains after RBNZ rate decision
The Reserve Bank of New Zealand’s (RBNZ) surprise decision to leave interest rates on hold at its November meeting saw the New Zealand dollar surge on Wednesday.
As markets had already effectively priced in an interest cut to 0.75%, NZD exchange rates leapt across the board in the wake of the announcement.
This bullishness could fade ahead of October’s manufacturing PMI, however, as forecasts suggest another month of weakness for the sector.
Upcoming Data:
14th November 2019
09:30 GBP Retail Sales
10:00 EUR Eurozone Gross Domestic Product
21:30 NZD Manufacturing PMI
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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