Morning Bulletin
Yesterday
- Yesterday morning’s key UK data was largely in-line with expectations:
- The Average Earnings Index was 2.5% as expected.
- Government borrowing actually ran a surplus of11.6Bn. That borrowing figure led to the ONS suggesting UK borrowing for the year to date is at its lowest level since the Financial crisis in 2008.
- The number of people claiming Unemployment related benefits (Claimant Count Change) was down7,200 during January. A rise of 2,300 had been forecast.
- Despite the fall in benefits claims, the overall Unemployment rate unexpectedly rose to 4.4% from a prior 4.3%. That was in fact the first increase in the rate since June 2015.
- Whilst the UK data was largely solid the Pound did decline a fraction in FX space.
- Sterling did bounce back in the afternoon following comments from a number of Bank of England members who were testifying before the Treasury Select Committee on inflation and the economic outlook.
- Chief Economist Andy Haldane said he thought there was a chance interest rates would need to rise faster than the central bank’s central view in order to bring inflation to target.
- Governor Mark Carney suggested the financial markets predictions of a 50% chance of a rate hike in May were now moving appropriately in line with the underlying economic data.
- Some of yesterday’s other key data included:
- Eurozone Flash Manufacturing PMI 58.5 (59.2 Exp)
- Eurozone Flash Services PMI 56.7 (57.7 Exp)
- US Existing Home Sales 5.38M (5.61M Exp)
Overnight
- French Final CPI m/m -0.1% as expected.
- According to the Telegraph, the Cabinet did not agree to PM May’s strategy for the Brexit transition period.
- Minutes from the US Federal Reserve’s January meeting were released last night and they revealed that Fed officials saw increased economic growth and a rise in inflation as justification to continue raising interest rates gradually. The majority of Fed members saw the near-term outlook as modestly stronger, with risk to the upside coming from tax cuts and strong growth increasing the likelihood of further rate hikes.
- The US Dollar rallied following the minutes, with GBP/USD falling to a 1.3900 handle and EUR/USD breaking back down below the 1.2300 level.
Today
- Busy data calendar today. This morning UK GDP is our key print at 9.30am.
- Into the afternoon and the minutes from the ECB’s latest monetary policy meeting will be closely scrutinized when released at 12.30pm.
Currency Pair | Interbank Rate | % Change on Day |
GBP/EUR | 1.1319 | -0.10 |
GBP/USD | 1.3894 | -0.16 |
EUR/USD | 1.2273 | -0.08 |
AUD/USD | 0.7806 | +0.03 |
Time (GMT) | Region | Data Release | Forecast | Previous |
09.00 | EUR | German IFO Business Climate | 117.1 | 117.6 |
09.30 | GBP | Second Estimate GDP q/q | 0.5% | 0.5% |
09.30 | GBP | Prelim Business Investment q/q | 0.5% | 0.5% |
11.00 | GBP | CBI Realised Sales | 13 | 12 |
12.30 | EUR | ECB Monthly Meeting Minutes | ||
13.30 | CAD | Core Retail Sales m/m | 0.1% | 1.6% |
13.30 | USD | Unemployment Claims | 230K | 230K |
14.00 | EUR | Belgian NBB Business Climate | 1.5 | 1.8 |
21.45 | NZD | Retail Sales q/q | 1.4% | 0.2% |