Today’s UK retail sales data has disappointed investors, putting further pressure on the Pound against the US Dollar. A slower pace of growth in retail sales for September has raised doubts about the prospects for the economy going forward. Yesterday’s minutes from the BoE’s recent policy meeting had also weakened expectations of an early interest rate rise in the UK. However, tomorrow’s GDP report will be crucial in helping investors to reassess their view on the UK’s macroeconomic health and the future course of the monetary policy in the UK.Across Europe, data showed that the pace of manufacturing sector activity in Germany rebounded unexpectedly during October, suggesting that difficult conditions in the economy are fading away.
Although the scale of revival in the labour market continues to bode well for the UK and the US, sluggish consumer price inflation remains a key area of concern for both economies. Against this backdrop, today’s US inflation numbers will be closely eyed to ascertain whether both economies continue hand in hand with regards to inflation, especially after last week’s disappointing UK inflation data. Meanwhile, the minutes of the latest BoE policy meeting released today revealed that two MPC members continued to vote for an immediate rise in the nation’s interest rate.Yesterday, the Euro came under pressure against the majors following media reports indicating that the ECB might consider purchasing corporate bonds in the near future.
Sterling investors largely shrugged off the weak UK public sector net borrowing data as the Pound showed little reaction against the majors this morning. Market attention has now shifted on to the minutes of the BoE’s latest policy meeting scheduled tomorrow for further direction. Traders are anticipated to scrutinise the minutes to gain an insight into the timing of an interest rate rise in the UK.Across the Atlantic, the only notable macro trigger today is the existing home sales report which is expected to show encouraging sales for September. Meanwhile, in the absence of any important economic data in Europe, the common currency is likely to remain supported against the majors following better than anticipated Chinese GDP data for the third quarter.