- Sterling gained ground on the euro and US dollar yesterday as inflation data came in higher than expected. This coupled with talk of a softer Brexit than anticipated pre-election saw sterling rally throughout Tuesday.
- UK CPI y/y came in at 2.9% when most estimates were at 2.7% and this gave sterling some respite against the euro by pushing back up to 1.1375 from 1.1308.
- GBP/USD bounced from lows of 1.2642 to close at 1.2752.
- Most analysts are still bearish on the pound due to the complexity of the upcoming Brexit negotiations.
- UK RPI y/y also came in stronger than expected at 3.7% vs 3.5% expected but PPI input m/m was vastly weaker than estimates coming in at -1.3% vs -0.5%.
- German ZEW economic sentiment disappointed at 18.6 vs 21.6 expected whereas US PPI m/m matched expectations at 0.0%.
- Overnight we saw NZD current account data come in weaker than expected at 0.24B vs 0.95B expected.
- Chinese industrial production y/y matched expectations at 6.5% and fixed asset investment also came in as expected at 8.6%.
- This morning we saw UK unemployment data released at 9.30am with average earnings index 3m/y coming in weaker than expected at 2.1% vs 2.4%, claimant count change coming in better than expected at 7.3K vs 12.5K.
- At 1.30pm we have inflation and retail sales data from the US before the FOMC is expected to raise rates to 1.25% from 1.00% this evening at 7pm. The accompanying FOMC press conference is scheduled for 7.30pm.
|Currency Pair||Interbank Rate||% Change on Day|
|Time (GMT)||Region||Data Release||Forecast||Previous|
|13:30||USD||Core CPI m/m||0.2%||0.1%|
|13:30||USD||Core Retail Sales m/m||0.2%||0.3%|
|13:30||USD||Retail Sales m/m||0.1%||0.4%|
|19:00||USD||FOMC Economic Projections|
|19:00||USD||Federal Funds Rate||1.25%||1.00%|
|19:30||USD||FOMC Press Conference|