Monthly Archives: October 2023

This week we have the Bank of England policy announcement that will take centre stage on Thursday.

The pound has had a negative run of late following the Bank of England’s decision last month to not raise interest rates.

This week’s policy announcement is expected to confirm the Bank will not be increasing rates for a second consecutive month. Markets will be keen to see what kind of comments come out of this meeting and what the long-term view is going forward regarding interest rates.

GBP remains rangebound against the euro with very little movement over the past week, but it is expected that the Bank of England’s policy announcement could break the deadlock and either push it lower to fresh multi-month lows or even prompt a rebound.

This week’s highlight for the Euro will be the release of the Eurozone inflation figures for October.

For today, German GDP flash estimates for the quarter have come in a little better than expected. Later in the morning we have the Business & Consumer Confidence figures for the EU, followed by German CPI numbers later this afternoon.

For the UK, we have the Mortgage Approvals and Lending figures due this morning. Finally, to confirm there is no US data due today. 

The ECB left policy unchanged yesterday for the first time since June 2022. President Lagarde reaffirmed at the press conference that the ECB will keep interest rates at a sufficiently restrictive level for as long as it takes to return inflation to target. Despite the recent slowdown in business, this suggests that rate cuts are not now on the table.

The focus will shift to the remaining economic statistics due ahead of the Bank of England and US Federal Reserve policy announcements next week.

of importance are from the United States. In September, core-PCE inflation is expected to fall to 3.7% from 3.9%. Meanwhile, consumer spending and income are expected to remain strong in September.

Today’s major focus is the ECB interest rate announcement, which is expected to be the same as in September, at 4.5%.

EU inflation numbers have improved in recent months, and the stronger-than-expected EU PMI figures earlier this week help support a pause in the ongoing ECB rises, which have been in place for the previous 9 consecutive months to help combat inflation.

President Lagarde’s speech follows the rate announcement, she will discuss the potential outlook on future hikes and if one more is necessary.

US unemployment claims and GDP figures are set to be released this afternoon. US GDP is forecast to rise by 1.9% from the previous quarter to 4.3%, demonstrating the economy is growing. 

This week, Pound Sterling has been the weakest performing currency, with no support level over 1.1500 against the Euro.

On the currency front, the dollar was retaining a weaker tone. As a result, the euro and sterling both gained ground versus the US dollar.

The UK unemployment rate, which was somewhat lower than expected at 4.2% in the three months to August, was already released in the macro diary.

Meanwhile, we’ll get flash PMIs from the Eurozone, the United Kingdom, and the United States throughout the day. They will provide an early indication of how these economies will fare at the start of Q4.

In September, the PMIs were generally weak across regions and industries (both manufacturing and services). Overall, the consensus predicts similarly modest outcomes in October.