Market Update

Bank of England Governor, Andrew Bailey, and other members of the BoE have given signs of an interest rate hike withing the next year. The Pound naturally rose against US Dollar and Euro at the close of week. The market has now retraced much of these gains over the weekend into the open this week with. The GBP/USD exchange rate remains higher than lows towards the end of August.

The US and China are in talks at present which may bring hopes for a recovery of two of the largest economies in the world. A phone call was held on Friday, requested by the US who are signalling they would like to change and improve the trade deal with China. Biden however, did state the US has no intention to change the one-China policy. Further progression may follow this week and will be worth keeping an eye on as the USD is pressured.

On a data front, The UK will see the release of employment figures on Tuesday. They key release being employment change and unemployment rate – the unemployment rate is expected to fall and will support the Bank of England’s interest rate rise in the coming 12 months or so. On Wednesday for the UK, Inflation numbers will be released with core inflation expected to increase from 1.8% to 2.9% and, similarly, inflation rate year-on-year expected to rise to 2.9% from 2%.

The US will also release it’s inflation figures shortly after the UK. Both core inflation and inflation rate are forecasted to fall by 0.1%. Any surprises with these numbers could portray volatility for the US Dollar. Later in the week, the US will release its industrial production month-on-month and year-on-year. Currently they are both expected to drop off which could potentially weaken the USD. Retail sales for the US is forecasted to show a small upbeat gain however is still expected to remain in a negative position in comparison to last month.

Along with the UK and US; inflation numbers for the Euro-zone will be released. Similarly to the US, the Euro-zone is forecasting a jump in inflation numbers – core inflation expected to rise by over 1%, month-on-month and year-on-year expecting a jump by over 0.5%. other than inflation numbers, it is a pretty quiet week of data releases for the Euro zone.

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