Pound Higher After May Halts Challenge, ONS Revises Data

The pound rallied yesterday as the ONS revised up a measure of labour cost inflation, which investors view as supporting the possibility of a BoE rate hike. Additional support stemmed from an easing in concerns over a challenge to the Tory leadership. Sterling-dollar regained 1.3100 and sterling-euro briefly broke 1.1200.

Previous Day's Market Highlights

The pound rallied yesterday as the ONS revised up a measure of labour cost inflation, which investors view as supporting the possibility of a BoE rate hike. Additional support stemmed from an easing in concerns over a challenge to the Tory leadership. Sterling-dollar regained 1.3100 and sterling-euro briefly broke 1.1200.
 
The Turkish lira plummeted as tensions with the US rose and both countries suspended visa services.
 
Yesterday was a holiday in both the US and Canada, which contributed to US dollar weakness, as did speculation that new members next year might lead to a less hawkish Fed.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1179 1.1433 1.1008 3.72%
GBP / USD 1.3167 1.3664 1.3027 4.66%
EUR / USD 1.1777 1.2033 1.1669 3.03%
GBP/AUD 1.6908 1.7201 1.6398 4.67%
GBP / NZD 1.8624 1.8742 1.8036 3.77%
GBP / CAD 1.6480 1.6798 1.5938 5.12%

Today's Market Highlights

UK Manufacturing and Industrial Production figures surprised to the upside, offering the pound brief additional support this morning, while trade data showed a wider-than-forecast deficit. Brexit negotiation concerns remain a risk.
 
Releases this afternoon include NIESR’s GDP estimate for the three months through September and Canadian housing data (13:00, 13:15 BST).
 
Fed Member Kashkari will give the opening remarks at the Regional Economic Conditions Conference (15:00 BST). Kashkari is one of the Fed’s dovish members and earlier this month expressed hesitation on raising rates again before inflation hits the Fed’s 2% target rate.
 
Investors will keep an eye on additional guidance ahead of the release tomorrow of the Fed’s latest meeting minutes.

Today's Economic Calendar

Time Currency Release Consensus Previous
13:00 GBP NIESR GDP Estimate 3M (Sep) 0.4%
13:15 CAD Housing Starts s.a. YoY (Sep) 210.0K 223.2K
13:30 CAD Building Permits MoM (Aug) -1.0% -3.5%
15:00 USD FOMC Member Kashkari Speaks
17:00 EUR Catalan Parliament Session