15th September 2017 Market Update
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?? GBP – After a lacklustre few weeks with little to shout about, the pound rebounded significantly yesterday. This was due entirely to the Bank of England’s policy statement following the monthly interest rate decision. Whilst rates were left unchanged as expected, the committee offered the tantalising view that with the pace of rising inflation and the small, but significant increase in wage growth, interest rates may have to be increased faster than the market has been anticipating. Mark Carney reiterated this stance later in the afternoon, stating that a modest adjustment may be needed in the coming months.
The upshot of this is that Sterling enjoyed a marked leap in value, gaining around 2% across the board. Today is a quiet day data wise so many will be hoping for the pound to sustain its gains into the weekend.
?? EUR – There was no data of note out yesterday for the single currency and its movement was dictated by events elsewhere. The euro remains in a dominant position versus the US dollar, but lost significant ground against the pound following events in the UK. As has been the case for some time, the currency remains dominant amongst its peers whilst Brexit negotiations continue and the effects of the UK’s exit are yet to be gauged. There remains a feeling that should the UK thrive and prosper in the immediate years to come, the bloc could find itself under pressure from several member states, causing fracture and instability and threatening the euro’s buoyancy moving forward. All of this, however, remains to be seen.
There is nothing of note due to be released in the zone today, but Trade Balance figures due this morning can sometimes cause some volatility.
?? USD – The dollar has come under pressure recently and yesterday’s Consumer Price Index figures must have come as some welcome relief, being higher than forecast. The greenback did enjoy a brief rally on the back of this, but soon lost its gains, especially versus Sterling. In fact, the currency closed the day at its weakest level against the pound for a year. This is great news for dollar buyers.
Today sees key Retail Sales data being released this afternoon. The forecast is for a weaker reading than previous and therefore any improvement could be seen as bullish for the greenback.
11:00am – EU Trade Balance Figures (July)
13:30pm – US Retail Sales (August)
Our View: With significant gains being made for the pound, it provides some welcome news to those that have been patiently waiting for an improved position for some time. However, it should be noted that the Bank of England has merely signalled what its intentions might be based upon current data, rather than making any firm commitment, therefore we wait to see how long the good news will last.
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