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December 2016

Sterling shuffles as UK data gives BoE unclear messages

Published: Wednesday 14 December 2016

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  • Sterling shuffles as UK data gives BoE unclear messages
  • USD stable ahead of expected Federal Reserve rate hike

UK Consumer Price Inflation rose faster than expected in November. 1.2% annual growth was faster than the 1.1% expected by the markets and that strengthened the Pound a little but the slowdown in house price rises, also reported yesterday, eased the pace of the Pound’s advance and we have seen some profit taking overnight. This morning’s big data was the UK unemployment report. Whilst the unemployment rate stayed at an 11-year low, these were fewer people in work than last month. That can be skewed by migration numbers and age changes that bring people into or take them out of the workforce. Nonetheless, Sterling has slipped back a tad on the news as traders now prepare for tomorrow’s Bank of England interest rate decision.  No change is expected from the BoE but their statement must reflect the rising inflation and continually strong data emanating from most parts of the UK economy.
 
This afternoon’s notable data is the US Federal Reserve’s decision on interest rates. Pretty well every analyst believes the Fed will raise the US base rate but there is an outside chance of a ‘on hold’ decision. Hence the USD is not racing away right now. We will also see US retail sales and industrial production data; all of which is expected to be less buoyant than last month. That could influence the Fed members’ thinking, so be prepared for an unexpected ‘on hold’ announcement.
 
Other than these blockbusters, there isn’t much to talk about today, so I will let you get on with a day full of train strikes, Trump astonishment, Brexit fears and the dire pictures from Aleppo.  Or maybe back to bed, eh?!
 
Big Boy

A doctor and midwife are helping a woman deliver her baby at home. She had gone into labour while her husband had been out fishing and the medical team had arrived before him.
 
“Mrs Jameson, isn’t it your husband who has all of those record catches?” says the doctor, trying to distract the wife while they wait for the next contraction.
 
“Yes,” she says, “He’s well known for his angling.”
 
Just then the next contraction starts and the baby is ready to come into the world. As the woman is pushing for the last time, her husband arrives home and dumps his fishing tackle in the corner of the room before rushing to his wife’s side. “No no no no”, says the midwife as she ushers him off to the bathroom to wash his hands and face and get rid of his dirty clothes before he touches the baby and sets about cleaning up the new arrival.
 
“We don’t have any scales,” says the Doctor. “but this will do.” He scoops up the scales from the floor next to the fishing tackle and hangs the baby under them by the blankets he is wrapped in.
“Mrs Jameson, your bouncing baby boy weighs…….32 pounds and 4 ounces apparently!”.

Daily Currency Analysis by David Johnson
 
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