Author Archives: Ricky Kielkowski

Market Focus Shifts to US Unemployment & Eurozone Confidence
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Money News Overview 17th October: Focus will be on the ECB rate announcement this afternoon

Today is a busy day in terms of economic data with the EU inflation figures due at 10am followed by the ECB’s interest rate announcement in the afternoon.

Later today, we have the US retail sales & Industrial production figures due.

The ECB interest rate announcement at 1.15pm will be the main focus today.

There is very high expectation rates will be cut again today for a second consecutive time, following clear evidence of a slowing economy and inflation rates dropping to its lowest level in some time.

The comments that follow thereafter by ECB president Christine Lagarde will as always be carefully monitored for clues on the banks future expectations and rate cuts.

A rate cut in December is already looking likely and is widely expected by markets.

The ECB is unlikely to alter its expectations on future rate cuts, therefore we could see a fairly resistant euro on the back of this, unless of course there are surprises.

US retail sales are expected to come in at 0.3 percent, higher than last month’s 0.1 percent figure.

The dollar is well supported on the back of global negativity and has gained 3.5 percent against the pound over the past month.

GBP dropped following softer-than-forecast UK inflation data at the start of the week raising the odds of bank rate cut in November.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

CPI inflation, which was the most significant piece of data, came in significantly below the market consensus at 1.7 percent.
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Money News Overview 16th October: UK inflation drops below 2%

Already released this morning, a flurry of key UK economic data has been published. CPI inflation, which was the most significant piece of data, came in significantly below the market consensus at 1.7 percent.

UK inflation has dropped below the Bank of England’s target level of 2 percent, which is the lowest level of inflation since April 2021. CPI inflation is down 0.5 percent from August, placing an enormous amount of pressure on the BoE to reduce interest rates as inflationary tensions ease.

Pound Sterling was supported yesterday following important employment data. The unemployment rate dropped to 4 percent, its lowest level since earlier this year.

Despite an initial positive outlook after favourable employment figures, the UK economic data released earlier today has wiped out all of Pound Sterling’s recent gains and more. GBPUSD has dropped by 0.6 percent, while GBPEUR has fallen by 0.4 percent.

The disappointing data has triggered a sell-off in the pound and has reinforced BoE Governor Andrew Bailey’s comments regarding taking a more aggressive outlook on reducing the base rate.

Investors will now look towards UK retail sales data on Friday, to see if data can release in the green to bolster the Pound.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Pound hits 2025 highs
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Money News Overview 15th October: The dollar firmed overnight

There was a relatively quiet start to the week on financial markets yesterday. This was partly due to a sparse data schedule on both sides of the Atlantic and a partial market holiday in the US.

Meanwhile, currency markets remained range bound. Of the limited moves to note, the euro was holding a slightly softer tone throughout the European session. At the same time, the dollar was in the ascendancy overnight, amid hawkish remarks from Fed Governor Waller.

Already today, The pound strengthened versus the euro after the ONS announced on-target wage growth and a fall in the UK unemployment rate.

UK earnings, excluding incentives, increased by 4.9% from June to August 2024. Including bonuses, it increased by 3.8%.

Both readings were consistent with forecasts and are unlikely to significantly change expectations for the Bank of England’s impending interest rate decisions.

However, an unexpected drop in the unemployment rate to 4% from 4.1% calls for a gradual approach to rate cuts.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

US CPI inflation due today
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Money News Overview 10th October: A cautious tone to close the week

Data-wise, US CPI inflation in September exceeded expectations. The headline rate fell to 2.4% (vs. 2.3% forecast), while core-CPI increased to 3.3% (vs. 3.2% expected). Meanwhile, initial unemployment claims increased to 258k from 225k.

Overall, the signs suggest that the Fed will lower rates gradually. In addition, the most recent ECB meeting minutes indicate that the Governing Council supports a gradual pace of rate decreases. However, recent comments by ECB officials have opened the door to a faster rate of lowering.

The British Pound is expected to decline next week as inflation falls below the 2.0% target once again. Many believe UK headline CPI inflation will fall below the Bank of England’s 2.0% target when September numbers are released on Wednesday next week.

However, for those who require a stronger Pound Sterling, the move could be another disappointment, since it may prompt the Bank of England to accelerate the rate at which interest rates are reduced.

UK GDP increased by 0.2% in August, as expected, according to data released this morning. However, the July reading was cut down to +0.3% from +0.5%. The data had no influence on sterling in early trading. The rest of today’s data calendar is quiet.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

Dollar Weakens as Markets Eye ECB Rate Cut Decision
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Money News Overview 10th October: U.S Inflation Data in the Spotlight

Today’s market attention is firmly on the States, with inflation data set to take centre stage. It is expected, CPI inflation will marginally fall to 2.3 percent (previous 2.5%) – investors have been anticipating this release to gauge the Federal Reserves future monetary policy stance.

The Federal Reserve began its rate-cutting cycle in September, beginning with a jumbo 50-basis point cut, which was the first rate cut in the United States since 2020.

US inflation is heading back towards the Bank’s target rate of 2 percent. Markets are now pricing in the likelihood that the Fed will cut interest rates by another 50 basis points until year-end.

Pound Sterling remains in a good position against both the Euro and Dollar. However, dovish comments from the Bank of England’s Governor ‘Andrew Bailey’ with regards to the BoE needing to be more aggressive with rate cuts has hindered GBP strength.

The Pound has continued to outperform this year against the other currencies in the G10, following robust economic growth.

Both GBPEUR and GBPUSD have remained relatively flat, showing little signs of volatility. This stability is largely due to a lack of significant economic data releases this week.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

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