Weak Economic Data Leaves Sterling…

GBP

The pound traded stable on Wednesday as weak economic data, which should hurt sterling, were more than offset by supportive political developments in Britain.

Inflation fell in October to its lowest level in nearly three years, official data showed on Wednesday to 1.5% , adding to expectations that the Bank of England’s next move might be an interest rate cut.

On Wednesday, Brexit Party leader Nigel Farage said he would stand down no more candidates beyond the 317 Conservative seats from which his party had already withdrawn. Johnson’s office said he would promise later on Wednesday to get Britain out of its Brexit “rut” if he wins next month’s vote, saying the world is baffled by why the country is so “hesitant about its future”.

More than three years after voting to leave the EU, the country is still struggling to agree on what its relationship with Europe will be after the divorce; the lack of clarity has dried up domes.

USD

The U.S. dollar was stable on Wednesday after October consumer price inflation was greater than expected and Federal Reserve Chair Jerome Powell offered an optimistic outlook for the economy, further solidifying the case for the central bank to pause its monetary easing cycle.

U.S. consumer prices jumped by the most in seven months in October, a report from the Labor Department on Wednesday showed, as the cost of healthcare surged by the most in more than three years. The Fed uses interest rate hikes to rein in inflation, making a near-term cut slightly less likely.

In addition, Powell on Wednesday said he saw “sustained expansion” ahead for the country’s economy, with low unemployment boosting household spending and the full impact of the three interest rate cuts in the past three months still to be felt.

Boosting demand for safe-haven assets were the police crackdown against protesters in Hong Kong and a speech by U.S. President Donald Trump in which he threatened to raise tariffs on China and criticized European Union trade policies before a Nov. 14 deadline to decide whether to raise tariffs on European and Japanese carmakers.

Key Announcements

09.30 – GBP: Retail Sales MoM; Forecast at 0.2% against previous of 0.0%
13.30 – USD: PPI MoM; Forecast at 0.3% against previous of -0.3%
15.00 – USD: Fed Chair Powell Testifies on the economy before the House Budget Committee

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