A new month ahead

3 October, 2016

Simon Eastman

As we ended September and start Octobers trade, we enter the final quarter for 2016.

The pound ended off weak having been on a renewed downward trend as economic data and sentiment waned as Brexit worries came back to the forefront for the U.K. and we get closer to another potential rate cut by the Bank of England. This month will be key in deciding whether to or not as the Bank wait to evaluate the inflation readings along with the other eco stats, culminating in the GDP figure end of the month. All these will play a part in the decision whether to cut interest rates again, likely to be by 10 basis points, to help aid the economy as we go through the Brexit process.

GDP on Friday came in lower than forecast but up on the last reading showing growth at 2.1 percent. Theresa May has been in the news last week talking about her exit plans for leaving the EU and promising to invoke article 50 by March at the latest. This was expected to be done by the new year so any further delay will likely cause havoc for the already stumbling pound.

So as the new month kicks off we have the usual round of ecostats to contend with, with the first week bringing plenty to move the markets. Monday is a national holiday for China, Australia and Germany but the rest of us have the following to deal with:

Monday – Markit manufacturing PMI for the EU, U.K. and US
Tuesday – Australian interest rate decision and policy statement, UK construction PMI
Wednesday -US, EU & UK services PMI, EU retail sales, US trade balance
Thursday – ECB monetary policy meeting (accounts)
Friday – UK industrial production and trade balance. US non farm payrolls and unemployment figures.

Plenty to adversely move the pound so anyone looking to move currency in the next week or so, should give one of the Currency Index team a call today for some friendly guidance.