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UK data releases are growing more important as factors of currency market volatility. With the Bank of England not expected to cut rates till its November meeting, data will rise in prominence for the time being.
However, markets are often subject to surprise factors, which could move rates against your favour. Find out how to mitigate your currency risk from our traders – get in touch with us today.
GBP: UK rate cut in November?
The recent autumnal conditions we have seen of late have not been encouraging, and we could be due more than the cold November rain. Bank of England (BoE) Deputy Governor Minouche Shafik confirmed that we could see easing as policy as early as the BoE meeting in November.
Speaking on Bloomberg TV, she commented, “If we have data prior to that which signals that stimulus is needed, we will obviously act.” It was thought that the central bank could hold rates until UK Chancellor Hammond delivers the Autumn Statement, which is set for release on 23rd November 2016.
With Brexit currently in limbo as we await the triggering of Article 50, the adjustments made to the economy and tax framework at the Autumn Statement will be key. Hopefully we will see a downpour of tax relief at this statement, as well as some rays of light.
This now makes October’s data releases crucial in terms of how they could affect sterling. If we see data recover from last month’s declining trend then this may be enough to keep the BoE from cutting rates further. However, another decline could see a rate cut triggered soon.
Looking to the data releases today we have another take on the lending and mortgage numbers. Any deviations from expectations could spell movement for sterling.
EUR: Will euro continue to fortify its position against sterling?
Yesterday saw data released from Italy, France and Ireland, but the most important release of the day was German Consumer Confidence, which came in worse than expected.
European Central Bank (ECB) President Mario Draghi spoke in Germany – where he defended his monetary policy to German lawmakers. Despite the worse-than-expected German data and the scrutiny placed on the ECB’s policies, the euro actually ended the day relatively flat against sterling due to comments from the Bank of England suggesting that lower interest rates in the UK could be round the corner.
Today sees yet another busy day for data releases. Lower tier information from Portugal, Belgium, Italy and the Eurozone will be released. Higher impact data to watch out for includes German unemployment data and Spanish Consumer Price Index (CPI) figures. Any deviations from the expected figures could lead to volatility in the markets, especially given the politically sensitive nature of employment and its possible effect on the upcoming elections in Germany.
USD: Will central bank rhetoric impact dollar markets today?
It was seen as a mixed day for US data, with the US dollar remaining fairly range bound. Durable Goods Order figures showed a static figure, but this was better than the expected contraction on the previous month’s data. The core data release (excluding transportation items), however, did show the contraction that forecasters were expecting. US Federal Reserve Chair Yellen testified before the Committee on Financial Services yesterday, but failed to touch upon monetary policy or economic outlook, however, she did show some concerns regarding US economy growth.
Final Gross Domestic Product (GDP) figures are the main release today to look out for. GDP data is a measure of growth in the economy and is expected to improve on the previous revision. Weekly unemployment claims data is also due out today – another stable figure is expected, whilst Federal Reserve Chair Yellen is due to speak once again, as well as Federal member Powell.
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