UK GDP numbers to bring back volatility

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The pound has managed to recover most of its losses in trading yesterday in the aftermath of Bank of England Governor Mark Carney’s unusually hawkish speech that calmed market fears. A statement earlier in the week by Chancellor Hammond, hinting that the economic prosperity of the UK will not be given preferential treatment in Brexit negotiations, saw Sterling lose ground against all its major counterparts.

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Elsewhere, Prime Minister Theresa May’s approval of an extra runway at Heathrow boosted confidence as revenue and employment growth are also expected from the move. However, the wobble for the pound shows the vulnerability of the currency and the lack of confidence that markets have in the build up to the triggering of Article 50.

With a fairly quiet economic calendar, comments from prominent leaders are providing direction for the currency, although third quarter UK GDP data to be released later this morning will be closely watched. With inflation showing a jump in the last print, conversely expectations for GDP to come in at a reading of 0.3 for the last quarter which will be the lowest for a year and could put the pound under renewed selling pressure. Consumer confidence data rounds up the economic calendar from the UK to provide us further direction.

US Dollar remains strong

The Greenback continues to remain strong though most of the focus is still surrounding the US Presidential Election which will culminate early next month. With reports that the Federal Reserve is holding back interest rates decisions based on political outcomes, Fed’s Bullard spoke earlier this week denying those claims. He has also suggested that December would be an appropriate time for an interest rate hike, though further rate rises will be few and far between.

Data to come

With manufacturing data showing an uptick, durable goods orders data is expected later today and a flat result is expected which will add to further interest rate rise speculations. Meanwhile, with a barren economic calendar from the Eurozone investors will still follow the European Central Bank statements as market expectations are for them to taper down on stimulus after the current program ends.

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