GBP Awaits Retail Sales; USD Looks to Fed

Sterling fell back lower as less-hawkish comments from BoE Governor Carney continued to weigh and the pound pushed through recent support levels. Political uncertainties came back into focus ahead of Friday’s speech from Prime Minister May in Florence. Cabledipped below 1.3500, whilst sterling-euro largely held below 1.1300.

Previous Day's Market Highlights

The pound traded lower yesterday, first on profit-taking and then on Bank of England Governor Mark Carney’s comments that any rate hikes would be “gradual” and “limited”. Cable fell back below 1.3500 for the first time since Friday’s rally, but remains around some of its highest levels since the day after the referendum.

Sterling-euro dipped back below 1.1300. The euro had a muted reaction as Eurozone CPI was unrevised in August. Headline inflation rose 1.5% and core inflation rose 1.3%.
 
The Canadian dollar fell to its lowest levels against the pound since 3 August following a speech from the Bank of Canada’s Deputy Governor, Timothy Lane. Lane said that the Bank is watching the strength of the loonie. The BoC has already hiked rates twice this year, and remains data dependent on doing so again.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1260 1.1397 1.0745 5.72%
GBP / USD 1.3511 1.3617 1.2777 6.17%
EUR / USD 1.1999 1.2093 1.1739 2.93%
GBP/AUD 1.6809 1.7006 1.6165 4.95%
GBP / NZD 1.8362 1.8742 1.7609 6.05%
GBP / CAD 1.6590 1.6675 1.5837 5.03%

Today's Market Highlights

Slower Retail Sales growth than expected could add to recent pressure on the pound and see it edge lower (09:30 BST). Traders are awaiting Prime Minister Theresa May’s Brexitspeech in Florence on Friday.
 
The Fed is expected to keep interest rates on hold tonight (19:00 BST). Key will be guidance on the Fed’s thoughts on inflation and its implications for the path of rate hikes going forward, as well as the unwinding of the Fed’s bond holdings, which markets expect the Fed to announce it will begin in October. This would see tighter monetary conditions.
 
The Fed will release its updated dot plot, which shows the FOMC’s interest rate projections, and Chair Janet Yellen will speak at a press conference (19:30 BST).   
 
Later this evening, New Zealand releases Q2 GDP. Faster growth may support the kiwi ahead of elections on 23 September.  

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Retail Sales YoY (Aug) 1.1% 1.3%
09:30 GBP Core Retail Sales YoY (Aug) 1.4% 1.5%
09:30 GBP Retail Sales MoM (Aug) 0.2% 0.3%
09:30 GBP Core Retail Sales MoM (Aug) 0.2% 0.5%
15:00 USD Existing Home Sales MoM (Aug) 5.46M 5.44M
15:30 USD EIA Crude Oil Inventories (Sep 11) 2.925M 5.888M
19:00 USD Fed Interest Rate Decision 1.25% 1.25%
19:00 USD Fed Economic Projections
9:30 USD Fed Press Conference
23:45 NZD GDP QoQ (Q2) 0.8% 0.5%
23:45 NZD GDP YoY (Q2) 2.5% 2.5%
02:30 AUD RBA Bulletin