UK: Weekly FX Market Update 11 September

GBP

• As BoE Governor Bailey advises that the peak for UK rates is near, GBPUSD trades at 3-month lows.

• GBPEUR takes a back seat as well, this is despite Bailey warming of a possible higher inflation reading to come.

• Will average earnings released on Tuesday push higher? Will GDP on Wednesday expand slowly again?

• What impact will US CPI, released on Wednesday, have on GBPUSD?

• What will GBPEUR’s reaction be to the ECB rate decision on Thursday?

EUR

• The EURUSD has been pushed lower by a strong US dollar, and warnings of eurozone stagflation by ECB member Schnabel.

• ECB members Knot and Kazimir however, have hinted that a September rate hike is still a ‘possibility’.

• Bloomberg gives a 35% chance of a rate hike from the ECB on Thursday, suggesting that any decision could move the market.

• If they do hike, will that be a surprise and help lift the Euro?

USD

• Boston Fed president Collins warns that further Fed tightening ‘may be warranted, depending on the data.’

• US CPI is released on Wednesday. Market expectations are for a yearly gain of 3.6% and monthly 0.5%.

• Retail sales are due out on Thursday and consumer sentiment on Friday.

• After last weeks data drought, will volatility return this week?

Main events for this week:

Mon Sep 11

GBP 09:00 MPC Pill speaks

Tue Sep 12

07:00 GBP Claimant count change/Average earnings index/Unemployment rate

10:00 EUR ZEW Economic sentiment

Wed Sep 13

07:00 GBP GDP/Industrial and manufacturing production/Goods trade balance

13:30 USD CPI

Thu Sep 14

13:15 EUR ECB Interest rate decision

13:30 USD PPI/Retail sales

13:45 EUR ECB press conference

Fri Sep 15

09:30 GBP Consumer inflation expectations

13:30 USD Empire State manufacturing index

14:15 Industrial production

15:00 USD Prelim UoM consumer sentiment