GBP under pressure again ahead of inflation data

United States Dollar:

After staging a mild recovery late on Friday, GBP/USD snapped lower again on Monday as Europe came online. Both HSBC and Barclays announced that they would be pushing back their expectations for a UK interest rate hike by a full year, to Q1 2016 and Q3 2015 respectively. It was a good excuse for investors to sell the pound again, with it falling to a low of 1.5624 vs. the dollar and staying there overnight. There wasn’t any top tier data from the U.S. to shake things up and GBP/USD opens this morning at 1.5650. UK inflation data is due for release this morning and will be scrutinised closely. If weaker than expected, it will no doubt underline recent changes to rate hike expectations and in turn provide enough ammo for traders to take GBP/USD down and through support at 1.56. US producer price data and NAHB house prices are due for release later this afternoon as well.

Euro:

ECB President Mario Draghi spoke yesterday, testifying before the EU Parliament. He didn’t say anything too surprising, continuing his dovish tone and stressing that the governing council remained “unanimous in its commitment to using additional unconventional instruments if needed”, one of which might be the purchase of sovereign bonds. He also spoke about the need for fiscal and structural reform within governments and that monetary policy itself wasn’t enough to strengthen the EU economy. EUR/USD slumped following his comments and continued to drift lower overnight, falling to a low of 1.2442. German ZEW (results of an economic sentiment survey) is due today and will be eyed closely as a top tier type of economic data.

Aussie and Kiwi Dollars:

The RBA Monetary Policy Meeting Minutes failed to deliver any surprises overnight referring to the Aussie being over estimates of fundamental value, “particularly given the further declines in key commodity prices over the course of the year to date”. It went on to say that "members considered that the most prudent course was likely to be a period of stability in interest rates". AUD/USD opens this morning at .8740. As for the kiwi, we’re seeing some mild strength in NZD/USD this morning. It’s recovered off of the 79 US cents level and opens in London at .7960, this as we await a dairy auction at midday today which may well have an impact on the currency.

Data releases for the next 24 hours:

AUD: Westpac Leading Index (MoM) (Oct)

EUR: ZEW Survey – Economic Sentiment (Nov), ZEW Survey – Current Situation (Nov)

GBP: Core Consumer Price Index (YoY & MoM) (Oct), Consumer Price Index (YoY & MoM) (Oct), Producer Price Index, Retail Price Index (YoY & MoM) (Oct)

NZD: No Data

USD: Producer Price Index (YoY & MoM) (Oct), Redbook Index (YoY & MoM) (Nov 14), TIC Flows (Sep)