GBPEUR rates have remained pretty supported over the last week with Pound to Euro rates closing the week around 1.1550- unfortunately, GBPUSD has been a different story, the last week has seen us drop from 1.23 down to 1.21 which is a rather large move- unfortunately, we have had a few factors, the situation in Isreal being one of them which has sparked off strength in the Dollar index, and has negatively impacted the Pound and the Euro against the Greenback.
Another thing we have noticed over the last few weeks is the spike in oil and gas prices, which due to uncertainty in Isreal and generally colder weather is expected to rise even more- due to this, I can see inflation potentially spiking again across the world- especially in the UK and the U.S. The weather in the UK is expected to get colder over the month of October and gas prices will continue to rise, this will directly affect the CPI number for November when the BoE is now most probably looking at raising interest rates again by 25 bps. This has come as no surprise as I am sure we were all expecting prices to rise again through the winter, but it will be interesting to see just how much impact it does or doesn’t have considering the sheer amount of rate rises by Central Banks over the last year.
This week we have a few releases of note, the first being UK employment numbers on Tuesday, where we are expecting things to look slightly more positive- however the reality is that we are seeing the job market begin to cool off, so I would not be surprised to see a negative number here. We also have U.S retail sales and industrial production, both expected slightly weaker, however with other events going on, I am unsure if this will be enough to weaken the Dollar on it’s current run.
On Wednesday we have UK CPI (Inflation) which is expected to come down to 6%- though this will be viewed as a positive. please note my comments above about inflation rising again due to gas and oil, so I would not pay too much attention to this release as we are expecting inflation to go back up again next month. We also have European inflation numbers where again we are expecting the number to come down for last month, but again expecting it to rise again next month.
On Thursday we have jobless claims numbers out of the U.S- but the main event will be a speech from Fed Chair Powell, as the global landscape is changing, it will be interesting to see if his stance has changed at all on Monetary policy- any talk of interest rates changing could be market moving.
Lastly on Friday we have UK retail sales where we are expecting to see a better number, as the UK public has coped pretty well with the cost of living crisis we have seen spending remain pretty good across the board.