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via Barclays

Market News

  • UK headline CPI surprises to the upside
  • US Core Inflation misses expectations, trimming expectations for a December Fed rate hike
  • UK Government lawyer says it is “very likely” that Parliament would have to ratify EU exit

 

UK headline CPI surprised 0.1pp to the upside relative to Barclays Forecast and consensus, coming in at 1.0% y/y. That said, Barclays Research note “…we would exercise caution at this stage in extrapolating too much based on one print, given that the clothing and footwear component, which drove the upside surprise, can be notoriously erratic over the short term…”

Nevertheless, in the wake of the sharp GBP depreciation recently, Barclays Research have “…revised our 2017 UK CPI and RPI inflation forecasts higher…”

US core inflation rose a modest 0.1% m/m and 2.2% y/y, after a strong increase in August. Barclays Research and Consensus had expected a 0.2% m/m increase. The miss was mainly from a softer-than-expected outturn in core goods and medical services prices

As a result, the dollar stepped back from seven-month highs against an index of currencies overnight, as markets trimmed bets on a December Federal Reserve rate hike from 70% to 65%

The High Court case on article 50 concluded yesterday. The Court has not given a set date for their judgement, however legal experts have said they expect the decision to be handed down within the next 2/3 weeks to allow for the Supreme Court to have time to hear an appeal

Later in the day markets focused on a comment by a UK government lawyer that parliament would “very likely” have to ratify any deal to take Britain out of the European Union

In FX, Sterling strengthened c.1% on the day against the USD, its biggest gain in six weeks, to reach a one week high of 1.2325 (Bloomberg)

 

GBPUSD sits at 1.2280 with GBPEUR at 1.1176

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