GBP Volatility Likely on CPI, Carney

Sterling-euro largely held above 1.1200. Cable again tested 1.3300. The pound then fell around half a cent on reports that Brexit talks could collapse, which saw sterling down across the board. The dollar made slight gains on the back of an above-forecast NY Empire State Manufacturing Index reading.

Previous Day's Market Highlights

Sterling-euro largely held above 1.1200. Cable again tested 1.3300. The pound then fell around half a cent on reports that Brexit talks could collapse, which saw sterling down across the board. The dollar made slight gains on the back of an above-forecast NY Empire State Manufacturing Index reading.  
 
Euro-dollar was largely unchanged around the US release but drifted higher over the session, regaining 1.1800. The deadline for Catalan President Puigdemont to say whether he is declaring independence has been pushed back to Thursday.
 
The kiwi dollar made temporary gains overnight after Q3 CPI surprised to the upside, rising to 1.9% year on year.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1271 1.1433 1.1069 3.18%
GBP / USD 1.3252 1.3664 1.3027 4.66%
EUR / USD 1.1757 1.2033 1.1669 3.03%
GBP/AUD 1.6899 1.7201 1.6778 2.46%
GBP / NZD 1.8503 1.8742 1.8312 2.21%
GBP / CAD 1.6629 1.6798 1.6350 2.67%

Today's Market Highlights

The latest UK CPI figures are projected to show that inflation hit 3.0% in September, according to economists’ forecasts (09:30 BST). Higher inflation may add to expectations that the BoE will raise interest rates, supporting the pound.
 
However, the pound would come under pressure should the inflation reading disappoint expectations. Investors will look for the BoE’s latest thoughts on inflation and the need for a rate hike during Governor Carney’s testimony before the Treasury Select Committee (11:15 BST).
 
Attention on inflation continues with final Eurozone figures expected to confirm that headline inflation held at 1.5% in September and core inflation slowed to 1.1% (10:00 BST). Unrevised figures may see little market movement, whilst any surprise to the upside would strengthen the euro ahead of this month’s ECB meeting as investors anticipate clarity on the winding down of QE.
 
A selection of US data in the afternoon includes Industrial Production and CapacityUtilization (14:15 BST), both forecast to have picked up in September. Gains could offer the dollar support as investors look for signs of the economy’s strength ahead of a potential third Fed rate hike later this year. The Fed announces its next rate decision on 1 November.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Consumer Price Index YoY (Sep) 3.0% 2.9%
09:30 GBP Core CPI YoY (Sep) 2.8% 2.7%
10:00 EUR ZEW Survey - German Economic Sentiment (Oct) 89.0 87.9
10:00 EUR ZEW Survey - Eurozone Economic Sentiment (Oct) 34.2 31.7
10:30 EUR ECB's Praet Speaks
11:00 EUR Final CPI YoY (Sep) 1.5% 1.5%
11:00 EUR Final Core CPI YoY (Sep) 1.1% 1.1%
11:15 GBP BoE's Governor Carney Speaks
13:30 USD Import Price Index YoY (Sep) 2.6% 2.1%
13:30 USD Export Price Index YoY (Sep) 2.3%
14:15 USD Industrial Production MoM (Sep) 0.2% -0.9%
14:15 USD Capacity Utilization (Sep) 76.2% 76.1%
15:00 USD NAHB Housing Market Index (Oct) 64 64
NZD Global Dairy Trade Price Index -2.4%
18:00 USD FOMC Member Harker Speaks