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First real post-Brexit vote data – where are we headed?

First real post-Brexit vote data – where are we headed?

Yesterday, the Pound recovered following Tuesday’s comments from Treasury Head Philip Hammond that he wouldn’t oppose an extension of quantitative easing. Mortgage approvals printed slightly higher but had little effect on currencies.

The Pound is still benefitting from Governor Carney’s comments suggesting that the bank might decide against any further easing of interest rates. Sterling secured a steadier tone with a small net advance against the Euro at 1.1210 while there was a recovery to above 1.2200 against the Dollar with resistance at 1.2250.

The Q3 GDP data will be the main focus today. Weaker than expected data could revive expectations of further monetary easing as well as undermining confidence in the UK’s economic outlook. If the data prints much better than expected it could be interpreted as meaning that Brexit concerns were exaggerated.

An upbeat US trade deficit figure, coupled with a strong Markit services PMI report, led to speculation that the US economy could grow at a faster rate in Q3 than previously thought. The Dollar still relinquished Tuesday’s gains against the Pound throughout yesterday, however. EURUSD is relatively stable, with markets now awaiting tier one US data to determine the direction of the pair.

US unemployment claims, durable goods and pending home sales data will be lined up for release later today, which will be closely eyed for fresh insights on US interest rate policy.

Reports that the European Central Bank (ECB) would be extending asset purchases beyond March 2017 meant that the Euro fell 0.3% against the Pound. The ECB has yet to announce whether the asset purchasing scheme will see a full extension or whether a tapering process will bring it to an eventual halt.

Data to watch: 9.30am UK Q3 GDP, Quarter on Quarter, Year on Year. 1.30pm US Durable Goods Orders, Initial & Continuing Jobless Claims. 3pm Pending Home Sales. 12am Gfk Consumer Confidence.

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