Newsletter – 14th September 2017

Morning Bulletin

Yesterday

  • Yesterday sterling lost some of the momentum it had built up on Tuesday as it lost ground on the US dollar. After a 0.91% rally on Tuesday we saw cable give over half of its gains back, coming off by 0.56% on Wednesday.
  • GBP/EUR fared better make a marginal gain of 6 points on the day. We opened at 1.1101 before trading a high of 1.1131 then dropping to 1.1060 before a late recovery to close at 1.1107.
  • The big piece of data from the UK yesterday was average earnings index 3m/y which came in weaker than expected at 2.1% vs 2.3%. Wages are increasing at a lower rate than inflation so workers are worse off in real terms.
  • The unemployment figures were more encouraging with the claimant count reducing by 2.8k when it was expected to grow by 0.8k and the unemployment rate came in at 4.3% rather than the 4.4% expected.
  • In the US PPI m/m missed expectations coming in at 0.2% vs 0.3% and core PPI m/m also coming in weaker than expected at 0.1% vs 0.2%.
  • The dollar gained ground on the euro with EUR/USD falling from 1.1967 to close at 1.1885.
  • The European Commission President Juncker said the UK will soon regret leaving the EU. He said it will be a sad moment but added that the Union will move on and become stronger.
Overnight
  • Overnight we saw employment data from Australia. The employment change was much better than expected at 54.2k vs 17.5k and unemployment rate came in unchanged at 5.6%.
  • In China industrial production y/y came in weaker than expected at 6% vs 6.6% expected and fixed asset investment ytd/y came in at 7.8% vs 8.2%.
Today
  • All eyes are on the Bank of England today as the interest rate decision and MPC votes are announced at 12pm.
  • The base rate is expected to be held at 0.25% and the votes are expected to be 2 in favour of increasing the rate and 7 in favour of keep rates unchanged.
  • We will also see the minutes from the MPC meeting however we are press conference short of a ‘Super Thursday’.
  • This afternoon we anticipate inflation and unemployment data from the US in the forms of CPI m/m, Core CPI m/m and unemployment claims.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1101 -0.05
GBP/USD 1.3208 +0.00
EUR/USD 1.1897 +0.10
AUD/USD 0.8003 +0.23

 

Time (GMT) Region Data Release Forecast Previous
12:00 GBP Official Bank Rate 0.25% 0.25%
12:00 GBP MPC Official Bank Rate Votes 2-0-7 2-0-6
12:00 GBP Monetary Policy Summary
13:30 USD CPI m/m 0.3% 0.1%
13:30 USD Core CPI m/m 0.2% 0.1%
13:30 USD Unemployment Claims 303K 298K