12th June 2018 Market Update
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?? GBP – The pound suffered a sharp fall following manufacturing output data showing a 1.4 percent decline month-on-month. This was in stark contrast to economist forecasts of 0.3 percent growth. This has caused investors to have less confidence in the Bank of England raising interest rates in August.
Sterling has clawed back little so far today. This morning sees the release of average earnings data, which is a 3-month moving average of pay compared to the same period last year. This is a leading indicator of consumer inflation. Later on today and again tomorrow, parliament votes on amendments to Britain’s EU withdrawal bill. This is likely to result in significant Sterling volatility.
?? EUR – There is little to report from the zone yesterday, though there is talk of Mario Draghi looking to wind down the ECB bond-buying programme in the near future. The single currency remains strong for the time being.
There is nothing of note due out today.
?? USD – The dollar has started today on the front foot, following a positive summit between President Trump and Kim Jong Un. The Federal Reserve begins a two-day meeting today and is widely expected to raise interest rates for the second time this year. This has, however, largely been priced in by investors.
The US also sees the release of key CPI data later today, which is a major indicator of inflation levels. There is no change expected.
09:30am: Average Earnings
13:30pm: CPI m/m
Summary: Poor UK factory output impacts the value of the pound. US dollar is buoyed by successful Trump-Kim summit.
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