Newsletter – 19th July 2017

Morning Bulletin

Yesterday

  • UK Inflation headlined yesterday morning and there was a surprise fall in the CPI y/y reading. Forecast to remain at 2.9%, the actual print for June was 2.6% with the decline largely attributed to a fall in fuel prices.
  • Sterling was immediately sold off in FX space but continued to suffer weakness over the course of the day’s trading. GBP/EUR dropped from 1.1377 ahead of the release to a day’s low of 1.1233, whilst similarly GBP/USD declined from 1.3120 to a day’s low of 1.3004.
  • Whilst this fall in inflation may prove temporary, it could certainly see those more hawkish Bank of England members reconsider any rate hike at their next monetary policy meeting.
  • German ZEW Economic Sentiment 17.5 (17.8 Exp).
  • According to UK Chancellor Hammond the UK economy and exporters specifically, will adjust to take advantage of the weaker Pound by developing greater global competitiveness in the future, and that he sees signs of this already taking place.
  • The IMF has upgraded its 2017 growth forecast for Spain to3.1% from a previous 2.6%.
  • US Import Prices m/m -0.2% as expected.
  • New Zealand Global Dairy Trade Price Index 0.2% (-0.4% previously).
Overnight

  • Bank of England Governor Mark Carney said that there was no material change in the inflation outlook for the UK despite the unexpected drop in yesterday’s CPI reading.
  • Carney reiterated that the rise in inflation is largely down to the weakening of Sterling post-referendum and that it would remain above their target rate for some time to come.
  • Ahead of Thursdays ECB policy meeting, Bloomberg are reporting that ECB members have limited appetite for making any significant change to their policy language this week.
Today
  • Complete lack of data due this morning.
  • This afternoon we look to North America for our data fix in the form of Canadian Manufacturing Sales, US Building Permits and US Housing Starts. All due at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1299 +0.11
GBP/USD 1.3030 -0.07
EUR/USD 1.1531 -0.18
AUD/USD 0.7926 +0.14

 

Time (GMT) Region Data Release Forecast Previous
12.00 GBP UK PM Questions (House of Commons)
13.30 CAD Manufacturing Sales m/m 0.9% 1.1%
13.30 USD Building Permits 1.20M 1.17M
13.30 USD Housing Starts 1.16M 1.09M
15.30 AUD CB Leading Index m/m 0.5%
15.30 USD Oil Inventories -3.6M -7.6M