Carney: “UK financial system faces a challenging outlook”

• Bank of England Governor Carney spoke this morning on UK banking risks
• US data robust yesterday with consumer confidence reaching post-recession highs
• Substantial volatility for the oil market this week ahead of today’s OPEC meeting

via Barclays

This morning, markets have been focused on Mark Carney as he has spoken at length on risks to the UK banking sector. He commented the financial system faces a “challenging” outlook due to risks posed by leaving the European Union and other factors including the recent US election

The Financial Stability Report was published alongside the latest financial health check. While in aggregate the tests showed the banking system is well capitalized, Royal Bank of Scotland Group Plc failed to clear some hurdles and had to submit a new capital plan (Bloomberg)

In FX, GBP gained strongly against the USD and EUR yesterday but gave back some of those gains overnight in Asia trading hours. The EUR remains under pressure with the Italian referendum looming and ECB President Mario Draghi noting populist party resurgence has weakened the euro area’s integration

Yesterday, most US data releases came in above expectations; with consumer confidence reaching post-recession highs, climbing to 107.1, from 100.8 previously. Both the present situation and consumer expectations rebounded strongly

US Q3 GDP was revised to 3.2% in the second estimate, up from 2.9% in the prior estimate. The main source of revision was personal consumption expenditures, which were estimated to have grown 2.8%

Headlines ahead of today’s OPEC meeting have created substantial volatility for the oil market this week. Although a significant cut in production seems unlikely given differing interests within the group, OPEC will likely want to come out with some sort of agreement

However, risks to oil prices from geopolitical factors have increased after Trump’s victory

Todays’ currency rates: