Newsletter – 13th October 2017

Morning Bulletin


  • Yesterday was a real rollercoaster ride for Sterling and it was almost solely politically driven. By Midday Sterling had hit a month’s low of 1.1067 against the Euro, having traded as high as 1.1170 just hours earlier. Sterling also sharply decline against the US Dollar, falling close to a weeks low at 1.3121.
  • The move followed a Barnier/Davis press conference on the progression, or lack of, on Brexit talks, with Mr Barnier stating the parties were at an impasse as the UK was still unwilling to confirm the Brexit Bill payments.
  • Sterling remained under pressure for the remainder of the afternoon, but then shortly after 5pm German Newspaper Handelsblatt reported that the EU’s Chief Brexit Negotiator Barnier would be prepared to offer the UK a two-year transitional agreement to remain in the single market, provided the UK agrees to meet all of their existing EU obligations.
  • Sterling rallied aggressively in FX space following this report, with GBP/EUR closing the day at 1.1189, up +0.38% on the day. Whilst GBP/USD rallied to 1.3250, closing up +0.21% on the day.
  • There was of course some economic data released yesterday, which included:
    • Eurozone Industrial Production m/m +1.4% (+0.6% Exp)
    • US PPI m/m +0.4% as expected
    • US Unemployment Claims 243K (251K Exp)
  • Speaking in the afternoon the ECB’s chief economist Praet said that whilst it looks like the Eurozone will have had a strong 3rd quarter, underlying inflation still looks subdued. He called for the ECB to be patient until inflationary pressures are convicning within the data.
  • US Fed Member Bullard continued to voice his opposition to hiking rates whilst US inflation remains sluggish, stating the the Fed should defend the inflation target or risk losing credibility.



  • The Sterling rally that carried us into the close yesterday evening has continued this morning with the Pound making solid gains across the board in FX space.
  • Contrasting views from US Fed members speaking overnight, with Rosengren favouring a hike in December and suggesting three further hikes in 2018 could be about right. Whilst Bostic said he’s not sure the Fed will hike again this year, and Brainard pointed to the temporary headwinds for US inflation now looking more persistent and a material concern.
  • New Zealand Business NZ Manufacturing Index 57.5 (57.9 Prev)
  • China Trade Balance 193Bn (266Bn Exp)
  • German Final PPI m/m 0.1% as expected
  • Swiss PPI m/m 0.5% (0.2% Exp)
  • It could prove a very quiet morning’s trading with no economic data set for release.
  • All the action is likely to come this afternoon with key US data due at 1.30pm.


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1255 +0.42
GBP/USD 1.3311 +0.39
EUR/USD 1.1825 -0.04
AUD/USD 0.7837 +0.25


Time (GMT) Region Data Release Forecast Previous
10.30 EUR ECB Member Mersch Speaks
13.30 USD CPI m/m 0.6% 0.4%
13.30 USD Core CPI m/m 0.2% 0.2%
13.30 USD Core Retail Sales m/m 0.9% 0.2%
13.30 USD Retail Sales m/m 1.7% -0.2%
14.30 GBP CB Leading Index m/m -0.1%
15.00 USD Prelim UoM Consumer Sentiment 95.1 95.1
15.00 USD Business Inventories m/m 0.7% 0.2%
15.25 USD Fed Member Evans Speaks
16.30 USD Fed Member Kaplan Speaks