Sterling can't hold gains after NIESR GDP figure
US inflation expected to pick up
Current Market Overview
Yesterday’s announcement of a healthy improvement in UK industrial production; no doubt aided by the weak Pound and its attraction for overseas buyers, has failed to elevate the Pound. Sterling did initially rally but has slipped back to the same old £1.10 and $1.30 levels. That slide was due to the UK GDP growth estimate from the National Institute of Economic and Social Research (NIESR). That showed the UK economy losing momentum. However, they do agree with the BOE that the UK economy will grow by 1.7% this year and that is still reasonably healthy for an economy that everyone seems to be so keen to write off. If the UK can grow that fast in such challenging conditions, just watch it go when the Brexit shackles are off.
There is nothing on the UK data front today but we have already had a slew of EU inflation numbers and they were largely in line with expectations. That will continue through the morning and it is unlikely we will see much change in the Euro as a result.
This afternoon brings US inflation data and a couple of speeches from US Federal Reserve members. We are expecting the Consumer Price Index to have risen slightly on the month but that won’t alter the value of the USD too much. It is already strong in the face of rising tension between North Korea and ….well everyone else really. Such geo-political tension tends to strengthen the USD as investors seek the safety of US bonds. Share prices tend to slide and we are also seeing that. This has perhaps been exacerbated by the profit taking after a seemingly endless rise in US equities. I am no share trader but it seems obvious that, as and when the US Federal reserve starts to unwind their bond ownership, the reduction in cheap money will mean shares will slide further.
Incidentally, the Japanese Yen has also firmed on the tension between Trump and Kim (that’s Kim Yong Un not the Kardashian variety by the way).
This is a short report today because we are a little short on news but here’s wishing you a great weekend. See you on the other side.
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