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UK and Eurozone inflation focus in a quiet week for US data


Central bankers are increasingly focusing on persuading everyone that inflation is set to turn higher, however the data continues to tell a different story, at least in the US. With a lack of tier one US data this week attention will turn to UK and Eurozone inflation data to drive sentiment. We look at the outlook for forex, equities and commodities.

UK flag with markets board

Deciphering the outcome of the Brexit negotiations is anyone’s guess at the moment. For what it is worth, I expect that in traditional European Union negotiating style it will go down to the wire, with a late night caffeine-fuelled session before everything is finalised. And that’s just the transition deal! In all seriousness though, progress is slow, as anyone with a reasonable expectation of all things European would understand (remember Greece?), with both sides holding firm on even the initial stages of agreement (notably the divorce bill). Headlines are driving the outlook for sterling and as long as you stay close to the newsflow, there is room for profitable trading. Comments on the speed of the progress either positive (sterling up) or negative (sterling down) moves the market. Also movement towards a decisive 2 year transition deal would help smooth the eventual exit and could also be sterling positive. Both factors played out over the course of a number of hours last Thursday and reflected the case in point. Increased volatility and sharp swings on sterling. However, Brexit will give way to inflation to be a key driver of sterling this week as the CPI data and wage growth numbers are released. Last monetary policy meeting showed the Bank of England suggesting that slack in the economy had decreased and with inflation expected to tick higher on the headline back to 3.0% the pressure will mount once more for a rate hike in the early November meeting.

 


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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.