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US inflation figures in spotlight

business-articlesUS inflation figures in spotlight
  • UK industrial production forecast to slow
  • EUR investors to focus on Draghi speech
  • Strong CPI figures may bolster USD
Dip in UK factory output may weaken GBP

The pound is poised to slide this morning as the UK publishes its latest industrial production figures.

Analysts forecast today’s data will show domestic factory output growth slumped from a one-year high of 1.3% to just 0.4% in February.

While the dip may simply be a correction after output surged in January, following the re-opening of the Forties oil pipeline in the North Sea, it is still unlikely to be welcomed by investors.

The drop in production may also offset any possible gains for GBP from the accompanying trade figures, which are expected to show that the UK trade deficit narrowed from -£3bn to -£2.6bn in February.

Draghi outlook to remain cautious?

European Central Bank (ECB) President, Mario Draghi is set to speak later today and EUR investors will be watching closely for any hints on what direction the bank’s monetary policy may take in the coming months.

While its seems unlikely that Draghi will drop any major bombshells regarding the ECB’s policy plans, his comments may still prove supportive for the Euro if he talks up the single currency as he did earlier in the week.

Conversely, his speech may send EUR lower if he remains cautious in his outlook and hints that the ECB’s next rate hike may still be some way off.

USD may surge on inflation figures

The US dollar looks set to see significant gains later this afternoon, following the publication of the latest US consumer price index.

Economists expect the latest CPI figures will reveal that headline inflation surged from 2.2% to 2.4% in March, striking its best levels in a year.

The core reading is likely to be equally upbeat, with underlying inflation predicted to have climbed from 1.8% to 2.1%.

USD investors have been eagerly awaiting a robust uptick in US inflationary pressure, which has remained underwhelming over the last twelve months despite the strength of the US labour market.

A strong reading in March may also lead to renewed speculation over the possibility of more than three rate hikes from the Federal Reserve this year, something that may also help to shore up the US dollar.

Upcoming Data

Wednesday, 11 April, 2018

09:30                     GBP Industrial Production
12:00                     EUR Draghi Speech
13:30                     USD Inflation
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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