Mid-week report Report 10th - 13th August
Good morning everyone,
All Sterling exchange rates received support late yesterday afternoon on reports that the UK and EU are close to a deal which could be reached as early as Monday. The Euro, meanwhile, is being sold on concerns about Italy’s fiscal stance. There appears little sign that the Italian government will alter its budget plans before their submission to the European Commission next week.
UK data will continue to be overshadowed by Brexit talks. Barring a significant deviation from forecasts, reaction to this morning’s August GDP numbers may be limited.
Many expect the monthly UK GDP data to show that the economy continues to hold up well. August GDP is forecast to show growth of 0.2%, which would keep the rolling three-month growth rate unchanged at 0.6%. This is consistent with a 0.5% GDP growth outturn in Q3. That would be in line with the BoE’s latest staff projections, and above estimates of “trend” growth, which combined with the limited spare capacity in the economy would warrant higher interest rates. (UK GDP Data is due out at 9:30am)
The BoE’s Chief Economist Haldane is speaking at a conference on the future of work this morning, while US Fed members Evans and Bostic speak this afternoon.
US producer prices will be released ahead of the more closely watched CPI figures tomorrow. In the euro area, French and Italian August industrial production figures will be the last of the ‘big 4’ economies to report. The euro area estimate will be released on Friday. The main focus continues to be on the ramifications of the Italian government’s plan for increased borrowing.