Tuesday starts with UK public net borrowing, worth mentioning is that this reading exclude banks. It’s previous figure came in at -1.8B, forecast for today was that net borrowing will come in at -15. 7B, in reality it reached -18.3B. This is actually welcoming news suggesting that the government has created a surplus, taking in more revenue than it is spending. With the new governments budget upcoming and oil and energy prices increasing, net borrowing is becoming more important due to economic situation and what measures the government can take moving forward. Today also announces bond yield performances for the UK and Germany, we have seen bond yields spike recently, due to fear of higher inflations. This will also correlate for the UK with its release of net borrowing, as bond yields measure the interest the government has to pay on borrowing money.
In the afternoon the Euro zone will release consumer confidence, expected to deteriorate from -15.5 to -16.5. Overall consumer confidence across Europe has been slashed, with high oil and energy prices forcing ECB to raise interest rates twice since June by a total of 50 basis points. It might not sound like a lot but in comparison to the US and UK, Europe’s base rate was set a lot lower initially at 2%. The current base rate at 2.5%, which is a 25% increase on borrowers can already lead to difficulties on spending.
ADP weekly employment change is also due today for the US. Last week recorded an uplift from 12k to 16.25k. Improvements for weekly employment generally support the USD, indicating a better performing job market and spending increasing too. Throughout Tuesday we also have Federal Reserve speeches, after last weeks decision to hike interest rates market will be watching closely for any comments/indications on the Fed’s stance moving forward. Today also marks the beginning of the UN general assembly taking place in New York. Iran is expected to be there and could this lead to Iran and US government meetings intensify of finding a solution for the Hormuz situation? Whether a meeting can happen directly between Trump and Iran officials or held through mediators, it would be welcoming and potentially easy pressure of the situation. Oil prices have risen recently, leading to yet again inflation pressures.
GBP/EUR 1.1643 GBP/USD 1.3347 GBP/AED 4.9054
GBP/AUD 1.8770 GBP/CHF 1.0953 GBP/CAD 1.8739
GBP/NZD 2.3259 EUR/USD 1.1449 GBP/ZAR 21.7174