Sterling Rallies on Retail Sales

Sterling rallied on the latest data before coming under pressure on Brexit headlines from Salzburg. Canadian data is in focus today.

Previous Day's Market Highlights

The pound rallied once again as August Retail Sales surprised to the upside. Year-on-year, Retail Sales rose 3.3% versus forecasts of 2.3% growth. Sales were up month-on-month as well, contrary to forecasts for a decline. Subsequent gains saw sterling break 1.13 against the euro for the first time since mid-July and test 1.33 against the dollar, the highest levels since early July. However, cable failed to break the psychological 1.33 barrier. A softer dollar helped euro-dollar regain 1.17.
 
However, it was a similar story as on Wednesday: data-driven gains were later pared off the back of the latest Brexit headlines from Salzburg as EU leaders rejected Prime Minister May’s Chequers proposals.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1241 1.1302 1.0991 2.75%
GBP/USD 1.3247 1.3298 1.2785 3.86%
EUR/USD 1.1788 1.1803 1.1526 2.35%
GBP/AUD 1.8163 1.8401 1.7508 4.85%
GBP/NZD 1.9801 2.0031 1.9167 4.31%
GBP/CAD 1.7104 1.7190 1.6596 3.46%

Today's Market Highlights

Sterling is under pressure this morning on the latest Brexit headlines. Euro-dollar briefly hit 1.18 earlier this morning for the first time since mid-June, before falling back below the 1.18 handle on mixed flash PMIs from the Eurozone.
 
The main data releases of the day are this afternoon’s Canadian CPI and Retail Salesfigures (13:30 BST), which could present a mixed bag and therefore little clear price direction. Inflation is forecast to have softened but Retail Sales to have recovered after last month’s decline. Markets will also keep an eye on the latest trade headlines.
 
Highlights next week include a widely expected Fed rate hike, final estimates of Q2 GDP from the US and the UK, and preliminary September inflation figures for the Eurozone.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP Public Sector Net Borrowing (Aug) £2.850B £-2.872B
12:00 GBP BoE Quarterly Bulletin
13:30 CAD Retail Sales MoM (Jul) 0.4% -0.2%
13:30 CAD Core Retail Sales MoM (Jul) 0.6% -0.1%
13:30 CAD CPI YoY (Aug) 2.8% 3.0%
13:30 CAD BoC Core CPI YoY (Aug) 1.4% 1.6%
14:45 USD Prelim Markit Manufacturing PMI (Sep) 55.0 54.7
14:45 USD Prelim Markit Services PMI (Sep) 55.0 54.8

Caxton