Political speculation provides plenty of impetus for market movement as countdown to Brexit continues

• Crucial days for Brexit
• Inflation rates low in UK and Eurozone
• US awaits retail sales, construction and employment data

With the Brexit deadline looming ever closer, the economic data released for the UK and EU takes on even greater meaning this week, and the currency markets are responding. Any whisper of a decision or deal surrounding the Brexit negotiation process is having a profound effect on the Pound. The same is true for US data due this week, against the backdrop of US-China talks taking a negative turn once more.

Inflation rates low in UK and Eurozone

Inflation in the UK remains the same in the latest results published today, still at the lowest since 2016, but not falling further, as expected. This provides some respite for Sterling, which is holding up well as markets hang on to every word that comes from the Brexit talks, but rising and falling again suddenly on any potential developments. Figures from the last few months reflect the ongoing strain on the UK economy as the political uncertainty continues. This was apparent in the rising unemployment figures released on Tuesday 15th October, which showed the jobs market in the UK also falling foul of Brexit worries as unemployment rose from its until recent 45-year low. Employment is still rising year-on-year in the UK, but growth has slowed significantly in recent months owing to uncertainty amongst UK businesses and a reluctance of some to make big decisions until the implications of Brexit are clear.
 
Inflation was also in the spotlight for the Eurozone this Wednesday, 16th October, with Euro investors nervous following slowing inflation in the initial figures presented. The Euro is under pressure from the latest results, which show the lowest rate of inflation for four years and an ever more worrying economic outlook for the Eurozone.
 
UK retail sales data follows towards the end of the week, and will also be watched closely as a key benchmark of economic health. Brexit has already had a marked effect on UK shoppers’ spending and the latest results are likely to be in a similar vein. Initial indications are not positive following preliminary estimates of a 1.3% fall.

US awaits retail sales, construction and employment data

The US September retail sales figures will be released later today. Last month’s results beat expectations, but markets are expecting only a small increase in the latest data, given a number of contributing economic and geopolitical factors at play in recent months. The US will also release their latest residential construction figures and weekly jobless claims on Thursday. All of the data released is likely to be overshadowed by tightening trade tensions between the US and China, which poses significant risk not just for their economies, but all of those global economies with which they currently have trade relationships.

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We will keep you updated as we know more about the outcomes of the Brexit deal discussions and the big market movements you need to know about this week and the weeks ahead.
 
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