Sterling Awaits Brexit Updates, Latest Data

A mixed day for sterling saw initial weakness in the morning with comments from EU chief negotiator Michel Barnier suggesting that there had not been enough progress on Brexit talks, preventing them from progressing to trade talks. This news saw GBP fall around 1% against both the euro and US dollar during the morning.

Previous Day's Market Highlights

The dollar fell on Friday as September CPI disappointed expectations, adding to inflation uncertainties as the Fed considers whether to raise interest rates for a third time this year. However, it recovered ground on above-forecast Michigan Consumer Sentiment data and hawkish comments from Fed Chair Yellen on Sunday.
 
Sterling fluctuated on a lack of progress in Brexit talks and the possibility of a two-year transition deal. On Friday, sterling-euro held above 1.1200, hitting its highest levels in over a week. Sterling-dollar tested 1.3300 for the first time in nearly two weeks.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1269 1.1433 1.1069 3.18%
GBP / USD 1.3279 1.3664 1.3027 4.66%
EUR / USD 1.1784 1.2033 1.1669 3.03%
GBP/AUD 1.6859 1.7201 1.6778 2.46%
GBP / NZD 1.8501 1.8742 1.8312 2.21%
GBP / CAD 1.6569 1.6798 1.6350 2.67%

Today's Market Highlights

This week is set to be a busy one for the pound. Prime Minister May and Brexit Secretary Davis are in Brussels today ahead of Thursday’s EU Summit. A lack of progress in negotiations is a risk to the pound’s strength.
 
Tomorrow, the UK releases its latest inflation figures, with CPI expected to have hit at least 3.0% in September, and BoE Governor Carney testifies before the Treasury Select Committee. Other releases include wage and employment data on Wednesday and Retail Sales on Thursday.
 
Today’s calendar also includes the Eurozone’s August Trade Balance (10:00 BST), Canadian Foreign Securities Purchases (13:30 BST), and New Zealand’s Q3 CPIfigures (22:45 BST). A pick-up in inflation could strengthen the kiwi dollar this evening. The other releases may have limited market impact barring any surprises.
 
ECB Board Member Lautenschläger speaks at the George Washington University Law School this evening (19:00 BST). Any hawkish signals could strengthen the euro.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00 EUR Trade Balance n.s.a. (Aug) €23.3B €23.2B
10:00 EUR Trade Balance s.a. (Aug) €20.3B €18.6B
13:30 CAD Foreign Securities Purchases (Aug) $23.95B
13:30 USD NY Empire State Manufacturing Index (Oct) 20.7 24.4
19:00 EUR ECB's Lautenschlager Speaks
22:45 NZD Consumer Price Index QoQ (Q3) 0.4% 0.0%
22:45 NZD Consumer Price Index YoY (Q3) 1.8% 1.7%
01:30 AUD RBA Meeting Minutes