GBP Remains Vulnerable Ahead of Inflation Data

Chinese Data Shrugged Off as Equity Markets Edge Slightly Lower

European equity markets are expected to open a little lower on Tuesday, following similar moves in Asia overnight and a flat opening session in the US.

There doesn’t seem to be much really driving the markets right now and what little there is doesn’t appear to be having a great impact. The Chinese data overnight disappointed across the board and investors pretty much shrugged it off, although it’s worth noting they were only marginal misses and were in keeping with the broader trend.

Sterling Under Pressure as Pressure on May Mounts

The pound is coming under a little pressure again this morning, having already suffered decent losses at the start of the week as political concerns resurface as a critical time for Brexit negotiations. Theresa May’s position is looking increasingly under threat as a growing number of her own party scheme behind the scenes to replace her.

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Not only does this create political uncertainty at a time when the country is in desperate need of the opposite, it could also further delay or disrupt Brexit negotiations which are already progressing at a snail’s pace. MPs will begin debating a hundreds of proposed amendments to the EU Withdrawal Bill today, which will include enshrining a leaving date and time into law, leaving little flexibility for parliament if negotiations run until the last minute or run out of time altogether.

Sterling is likely to remain volatile today, with inflation data due out for October this morning and Bank of England Governor Mark Carney speaking shortly after. The central bank has previously claimed inflation would peak in October just above 3%, which will require Carney to write a letter to Chancellor Philip Hammond explaining the reason for the overshoot, even if the reason is quite obvious.

Crude Oil Hits A Volatility Slick

Central Bank Event Sees Fed, ECB, BoJ and BoE Heads Join Panel Discussion

The BoE raised interest rates earlier this month in an attempt to rein it in a little, a move many have questioned given its effectiveness at a time of significant economic uncertainty for the country. Carney will appear alongside the heads of the ECB, Federal Reserve and Bank of Japan this morning in a panel discussion at a central bank event in Frankfurt, which will be closely followed by traders.

That said, with the ECB having only recently announced a nine month extension and cut to its asset purchases, the BoE having raised rates and Yellen’s successor having been announced, I do wonder how much insight we’ll actually get today.

A Case of the Doldrums

German GDP and Inflation Data Gets Us Off to an Underwhelming Start

German GDP provided no surprises this morning, with the economy growing a respectable 2.3% in the third quarter compared to a year ago, in line with expectations. Inflation also rose 1.6%, unchanged from the previous month and also in line with expectations.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.