Sterling was in uncertain territory yesterday after UK inflation unexpectedly strengthened, but the odds of the Bank of England (BoE) responding with a further interest rate hike remain slim.
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.
Joining the corporate trading desk in 2007, Phil now overseas 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 FSA approval and has completed the Certificate in International Treasury Management (CertiTM)