It’s gonna be another busy one for the British pound! There are four top-tier events on the U.K. economic schedule for the week, so I suggest you read up on what’s expected and how these might affect your GBP positions.
1. U.K. Inflation Reports (Oct. 17, 9:30 am GMT)
With BOE policymakers leaning more and more towards hiking interest rates, pound bulls are eager to find out if the next batch of inflation readings will be strong enough to tip the odds towards tightening next month.
Keep in mind that the August figures surpassed estimates, with the headline figure jumping from 2.6% to 2.9% versus the 2.8% consensus and the core reading advancing from 2.4% to 2.7%. Underlying inflation figures such as the retail price index and the PPI input and output prices also signaled sustained upside pressure on overall price levels.
For the month of September, headline CPI is projected to tick even higher to 3.0% while the core reading could hold steady at 2.7%. And with annual inflation likely to overshoot the central bank’s 2% target for the umpteenth time, it ups the pressure on policymakers to rein it all in before it’s too late.
2. BOE Governor Carney’s Speech (Oct. 17, 11:15 am GMT)
Less than a couple of hours after the September inflation readings are churned out, Bank of England head honcho Mark Carney is scheduled to step up to the podium to deliver his latest thoughts on the economy.
In particular, Carney will be testifying in front of the Treasury Select Committee, so expect plenty of questions pertaining to inflation and monetary policy, as well as potential adjustments related to Brexit.
In his previous speeches, Carney has admitted that their inclination to hike may have also been brought on by peer pressure as the likes of Uncle Sam and Canada have been on a tightening spree this year. Carney has also warned that:
“There remain considerable risks to the UK outlook, which include the response of households, businesses and financial markets to developments related to the process of EU withdrawal.”
Apart from that, TSC members might also delve into the results of the BOE’s Credit Conditions Survey for Q3 which revealed that private sector lending has slowed.
3. U.K. Jobs Data (Oct. 18, 9:30 am GMT)
Next up, market participants will turn their attention to the release of U.K. employment data, particularly on wage growth trends.
For the month of September, the claimant count is expected to increase by 3.2K after falling by 2.8K in August. This means that the number of Brits claiming employment benefits increased again after posting back-to-back monthly declines.Still, the unemployment rate is expected to have held steady at 4.3% while the average earnings index likely maintained its 2.1% pace of increase for the three-month period ending in August.
There could be some factors pushing for an upside surprise, though, as BOE Governor Carney noted that falling immigration due to Brexit likely resulted to shortages in some sectors dependent on migrant labor. In effect, these tighter conditions might have kept both hiring activity and wage gains supported.
4. U.K. Retail Sales Report (Oct. 19, 9:30 am GMT)
Last but certainly not least is the U.K. retail sales report which could give policymakers and traders better insight on whether or not rising price levels have been taking their toll on consumers.
After posting a 1.0% gain in August, retail sales could see a 0.1% dip for September as a form of delayed reaction to the jump in prices of basic goods. After all, some households probably had to think twice about including an extra box of scones or another jar of Marmite in their grocery list now that these items are starting to become more expensive.
Then again, retail sales figures have been posting one upside surprise after another for the past three months, so there’s a good chance of seeing consumer spending keep calm and carry on once more.