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November 2017

Sterling steady after UK house prices tick up

Published: Tuesday 28 November 2017

  • Sterling steady after UK house prices tick up
  • Irish and German politics dominate Euro conversations
  • Canadian industrial production pickup expected
By David Johnson
 
According to Nationwide, UK house prices picked up a little in October. The uplift was only from 2.3% to 2.5% but it is against the flow of recent data and that helped the Pound hold its position after a very quiet Monday. Sadly, that is the only data to come from the UK today, so the markets will have to resort to Brexit and the press will have to focus on the Royal engagement gawd bless ‘em, every one. They do love a bit of royal news don’t they! The Metro has 13 pages of Prince Harry and Meghan Markle (add it to your spellcheck now). It’ll take almost as long to read as these two have known each other. We are all delighted and thrilled for them but would like some news as well please.
 
Monday may have been quiet from a data perspective but, we heard that all seven of the main UK banks passed the Bank of England’s (BoE) stress test, designed to check that banks could withstand a major financial trauma. That didn’t boost Sterling but it won’t do it any harm and the Pound remains around the €1.12 level and the US$1.33 level.
 
The Eurozone is focussed on the political machinations going on in Germany, where Angela Merkel is trying to build a coalition that will keep her in power. It would be useful to see her stay because she is cautiously positive towards the UK and that would be very helpful in the run up to Brexit. There is an equally crucial power struggle going on in Ireland, which could see snap elections called. The border with the North is at the centre of the Brexit dilemmas and we can all feel a fudge coming. At noon, (GMT) we will get German consumer confidence index which is expected to be unchanged from last month, so little change is expected in the value of the Euro.
 
This afternoon brings Canadian industrial production data. A bounce back from last month’s minus 0.3% figure is expected. The Canadian Dollar has been weakening since the beginning of November, so this result (if the forecasts are accurate) could offer some respite. The GBPCAD rate has risen from C$1.6550 earlier in the month to around C$1.70 right now. It will find support at C$1.6750 and resistance at C$1.71, so they are the bases for your order placement targets.
 
US wholesale inventories don’t sound like the kind of thing that ought to get you all flustered but the Federal Reserve is a big fan of this data. It hints at pressure or slackness in the supply chain and is a bellwether of future producer price inflation. So an improvement in the level of inventories will take some pressure off the Fed’s interest rate hiking cycle. That data is out at 13.30GMT.
 
The rest of the day is pretty chilled but you may need that time just to get through the Harry and Meghan blitzkrieg in the press.  If you feel your eyes getting tired while you do that, a barber in Chengdu, China is offering to refresh the inside of your eyelids by shaving them with a razor blade. Reuters report that one customer says, “my eyes feel refreshed after shaving.” The mere thought of that makes me quite unwell. 
Weight watcher

A woman sees her husband standing on the bathroom scales. He doesn’t notice her but she laughs when he sucks his stomach in.

When he looks at her quizzically, she says, “Sucking your belly in won’t make any difference.”

“Oh yes it does,” he says. “If I don’t do that, I can’t see the numbers.”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 07:00 UK: Bank Stress Test Results    
GBP 07:00 Bank of England Financial Stability Report    
GBP 07:30 Bank of England Governor Carney Speaks    
EUR 09:00 EU: M3 Money Supply 5.1% 5.1%
EUR 12:00 EU: German GfK Consumer Climate 10.7 10.8
CAD 13:30 Canada: Raw Materials Price Index 0.1% -0.1%
USD 13:30 US: Preliminary Wholesales Inventories 0.3% 0.5%
USD 14:45 Federal Chair Designate Powell Speaks    
USD 15:00 US: Conference Board Consumer Confidence 125.9 123.9
USD 15:00 US: Richmond Manufacturing Index 14 12
CAD 15:30 Bank of Canada Financial System Review    
CAD 16:30 Bank of Canada Governor Poloz Speaks    
NZD 20:00 Reserve Bank of New Zealand Financial Stability Report    
USD 20:45 US: Treasury Secretary Mnuchin Speaks    

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news