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GBP rise on the cards due to CPI figures, NZD poised to climb if dairy prices improve

business-articlesGBP rise on the cards due to CPI figures, NZD poised to climb if dairy prices improve
  • UK inflation forecast to slide
  • Italian trade surplus expected to widen
  • Likely uptick in dairy prices may strengthen NZD
UK inflation expected to retreat in December

The UK is set to publish its latest consumer price index (CPI) data later this morning, with economists forecasting that inflation will have slipped to 3% last month.

This would be down from the five-year high of 3.1% hit in November, and would be despite the fact that the Bank of England (BoE) implemented its first rate hike in over a decade at the start of the month.

The pound could still advance today if any decline in inflation is seen as helping narrow the gap with wage growth.

This should relieve some of the financial pressure facing UK households and would hopefully lead to a rebound in UK consumer spending, shoring up economic growth in 2018.

On the other hand a dip in inflation could see some pound weakness if markets feel it may dent the chances of another rate hike in 2018.

Italian trade balance could lift euro

Italy will release its latest trade balance figures this morning, with a predicted rise in the nation’s trade surplus likely to bolster the euro.

Analysts forecast  the trade figures will show that Italy’s trade surplus widened from €4.95bn to €5.22bn in November.

Such a jump would prompt the country’s trade balance to strike its best levels since July and would place its well ahead of the long-term average of €0.8bn.

Any increase is expected to be driven by improved consumption across the Eurozone, particularly in Germany, where imports jumped 8.3% in November.

EUR investors are also likely to welcome the figures as it would suggest trade across the bloc is beginning to balance out, helping to diminish concerns about German dominance.

NZD investors hopeful for uptick in dairy prices

The Global Dairy Trade auction will take place later this afternoon and the results could see the New Zealand Dollar trading higher.

Given that dairy products account for roughly a fifth of New Zealand’s exports the auction could have a considerable impact on the New Zealand Dollar.

The previous auction saw prices jump by a healthy 2.2% and NZD investors will be hoping for a repeat performance today.

Nevertheless, dairy prices have fallen significantly in 5 out of the 7 previous auctions and another hefty drop would put considerable pressure on the New Zealand Dollar.

Upcoming Data

Tuesday, 16 January, 2018
09:30                     GBP Inflation Rate
10:00                     EUR Italian trade balance
14:30                     NZD Global Dairy Auction
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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