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Resigned to Brexit?

Resigned to Brexit?

UK consumer price inflation increased by 0.1% in October and the annualised rate held at 2.4%; just shy of forecasts of 2.5% and the core rate held at 1.9% and met market expectations. The Pound ebbed lower as missing the forecast on headline CPI increased speculation of a delay to further interest rate increases.

As expected, Brexit-related headlines and politics dominated Sterling trading. Before the 2pm Cabinet meeting, rumours of reservations from the Attorney General and reports of a leadership challenge to Theresa May triggered sharp Pound losses. During the wait for further details, expectations of no immediate ministerial resignations meant the Pound was supported above 1.2900 against the Dollar. After a considerable wait, Theresa May announced Cabinet approval for the Withdrawal Agreement had been secured. Michel Barnier stated that decisive progress had been made and the EU will call the Brexit Summit.

Sterling surged higher but the move was limited by doubts that parliament would back the agreement. The Pound settled just above 1.3000 and the Euro above 1.1500 with Theresa May’s position still very vulnerable. Overnight, Sterling suffered the highest volatility since the June 2017 general election and there’s no sign of it abating just yet.

Breaking news comes in the form of UK Brexit Secretary Dominic Raab resigning this morning. It’s likely to be another volatile day full of uncertainty for the UK and Europe.


Headline US consumer prices increased 0.3% for October, in line with consensus forecasts, with the year-on-year rate also meeting expectations at 2.5% from 2.3%. Core prices increased 0.2% for the month with the year-on-year rate declining slightly to 2.1% from 2.2%. The data overall offered some reassurance that inflation was under reasonable control which could slow the pace of Federal Reserve (Fed) rate hikes next year and the Dollar edged lower after the release.

The first wave of the Central American caravan of migrants has reached Tijuana at the US border. President Trump has kept mostly quiet about the caravan in recent days since the US midterms, instead tweeting and talking about acting US Attorney General Matthew Whittaker, the wildfires in California and economic matters.

Across the Atlantic, the Philly Fed index and October’s Retail Sales will be the salient data releases.


The EU is going to publish its opinion on the Italian budget situation on the 21st November which contributed to the uncertainty surrounding the region. Italian bonds were, however, pretty much unchanged. Third quarter Eurozone GDP growth retracted slightly and versus the Dollar, the Euro slid to 1.1263 off the back of disappointing Q3 German GDP which came in below consensus.

However, all eyes were on the UK and the news coming out of Theresa May’s Cabinet meeting. Versus the Pound, the single currency dropped a point on Wednesday after reaching highs of 1.1530 on Tuesday. As more information came out, the pair slipped to 1.1450 and then recovered to 1.1500 levels.

Data today consists of retail sales out of the UK, the EU trade balance, and speeches from European Central Bank (ECB) members Coeure and Praet as well as MPC Member Tenreyro. That being said, Brexit and the fallout from the Cabinet meeting will dominate the news for today.

Data to Watch:

00:00 AUD Consumer Inflation Expectation (Nov)
00:30 AUD Unemployment Rate s.a. (Oct)
00:30 AUD Participation Rate (Oct)
00:30 AUD Employment Change s.a. (Oct)
01:30 AUD RBA Assist Gov Debelle Speech
09:30 GBP Retail Sales ex-Fuel (MoM) (Oct)
09:30 GBP Retail Sales ex-Fuel (YoY) (Oct)
09:30 GBP Retail Sales (YoY) (Oct)
09:30 GBP Retail Sales (MoM) (Oct)
12:15 EUR ECB Cœuré Speech
13:00 GBP MPC Member Tenreyro Speech
13:10 EUR ECB’s Praet Speech
13:30 USD Retail Sales ex Autos (MoM) (Oct)
13:30 USD Retail Sales control group (Oct)
13:30 USD Retail Sales (MoM) (Oct)
13:30 USD Philadelphia Fed Manufacturing Survey (Nov)
15:00 USD Fed’s Quarles speech
16:30 USD Fed’s Powell Speech
18:00 USD FOMC Member Bostic speech
21:30 NZD Business NZ PMI (Oct)

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