Sterling Correction Continued
9 October, 2017
Last week we saw sterling correction continued, having made some gains last month off the back of interest rate hike speculation.
With a new month, comes new data releases, which for the pound, mainly came out lower than the analyst expectations and consequently the gains the pound had made, slowly ebbed away. Having been testing the 1.14’s in September, over the week the pound lost nearly three cents by close of trade on Friday.
UK Growth Downgrade
According to newswires Friday, the Office for Budget Responsibility is set to downgrade its outlook for UK growth, leaving Chancellor Philip Hammond with little wiggle room when it comes to his budget report next month. According to the report, its possible the forecast will wipe off two-thirds of the £26 billion he has set aside to protect the economy from Brexit, adding further woes to already beleaguered process.
According to the report, its possible the forecast will wipe off two-thirds of the £26 billion he has set aside to protect the economy from Brexit, adding further woes to already beleaguered process.
US Non-Farm Payrolls
Friday saw the release of the ever key Non-Farm payrolls jobs data from the States, with much speculation as to what the figure might be due to the multitude of hurricanes which have hit recently. The figures were thought to be an additional 90,000 jobs, but it posted minus 33,000, while the unemployment rate rose to 4.2 percent. This is the first negative figure in 7 years and may well have an adverse effect on the Feds ability to raise interest rates by year-end as previously expected. The real-time result was a drop in EUR/USD of nearly a cent.
This is the first negative figure in 7 years and may well have an adverse effect on the Feds ability to raise interest rates by year-end as previously expected. The real-time result was a drop in EUR/USD of nearly a cent.
The Week Ahead
Monday – US markets closed for Thanksgiving
Tuesday – German import/export and trade balance, UK manufacturing and industrial production plus trade balance. UK NIESR GDP estimate
Wednesday – US FOMC minutes
Thursday – EU industrial production, US jobless claims, CPI inflation and speech by ECB President Draghi
Friday – IMF meeting, German inflation, US retail sales, US PPI inflation
All in all a quiet week for the UK with only a couple of key releases in a week awash with important US reports, which with the recent correction sterling has been seeing, could mean more of the same as the week goes on. Keep in touch with your broker here at Currency Index for regular updates on your specific requirements.
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