Poor UK retail sales data weighed on Bank of England (BoE) rate hike expectations on Thursday, leaving the pound in a weaker position against most of its peers.
The pound has lost much of its momentum this morning. GBP/EUR is down to €1.1181, while GBP/USD is higher at US$1.3171. GBP/NZD is also up, having risen to NZ$1.8632, while GBP/AUD is down to A$1.6908 and GBP/CAD to C$1.6483.
Read on to find out what the pound’s got in store from the economic data calendar today. Hint; it’s a lot…
What’s been happening?
The pound was able to rebound sharply from last week’s weakness yesterday, with markets taking the opportunity to buy Sterling up while it was cheap.
By mid-afternoon GBP was 0.7% higher versus EUR and USD, 0.8% higher versus CAD, 1% higher versus AUD and 1.1% higher against NZD.
There was no UK data released to help fuel the pound’s gains but, given the recent spate of poor readings seen from domestic ecostats, this fact probably worked in Sterling’s favour.
Despite weakness against the pound, the euro was largely on buoyant form against its other major peers yesterday, thanks to some positive domestic data from the Eurozone. The morning’s German industrial production figures showed a significantly better-than-expected rate of output growth.
Production smashed forecasts of 0.9% growth on the month to clock in at 2.6%, while year-on-year output hit 4.7% instead of weakening from an upwardly-revised 4.2% to 3%.
The subsequent Eurozone Sentix investor confidence index further heated up appetite for the euro after rising from 28.2 to 29.7, beating expectations of 28.5.
Similar to the euro, the US dollar may have been weak against the pound but was doing well elsewhere, as markets left the safe-havens of the Japanese yen and Swiss franc but remained wary of the high-risk Australian and New Zealand dollars.
What’s coming up?
There is plenty of UK data set for release today to keep the pound volatile. Poor results here could stymie GBP’s fledgling rally.
Data includes the August industrial, manufacturing and construction production figures, as well as the latest trade balance. The National Institute for Economic and Social Research (NIESR) will release its estimate for GDP in the three months to September in the afternoon.
Earlier German data has surpassed expectations and given the euro a boost at the start of the session. The trade balance came in at €20 billion instead of the forecast €19.6 billion, thanks to a surge in export growth of 3.1% - nearly triple the forecast level.
There is little data of influence on the US economic calendar today. A speech from Federal Reserve official Neel Kashkari could unsettle the odds of an interest rate hike in December, although considering bets are currently at 86.7% it is unlikely his words alone will do much to affect the overall outlook on policy.
Phil joined the corporate foreign exchange department in 2000, and initially worked as a Senior Executive Dealer on the private client desk. In 2007, Phil moved to the corporate dealing desk as a corporate dealer and now oversees the corporate trading desk. Phil helps to manage the trading activity of the dealing desk and also works with a portfolio of corporate clients to help with their foreign exchange and risk management needs. Phil has attained FSA approval and has completed the Certificate in International Treasury Management (CertITM).
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