The British Pound’s post-Brexit base effect weakness has worked its way out of markets, but its influence will linger at the upcoming inflation release, as anticipated by the Bank of England at their October policy meeting. Consensus forecasts are calling to see price pressures increase by +0.2% m/m (down from +0.3% in September) and +3.1% y/y (up from +3.0% in August). Likewise, Core CPI is expected to increase to +2.8% from +2.7% (y/y).
Unlike inflation reports in previous months, the upcoming data release doesn’t significant importance for the Sterling. Even as BOE policymakers have warned that headline CPI could stay over +3% through the middle of Q4’17, the October rate hike was a one-off event; it was not the beginning of a rate hike cycle. Inflation will need to persist above +3% through the end of 2017 and into early-2018 if rates markets are going to pull forward the timing of the next hike – currently pegged at November 2018.
Pairs to Watch: EUR/GBP, GBP/JPY, GBP/USD
11/14 Tuesday | 23:50Â GMT |Â JPYÂ Gross Domestic Product (Annualized) (3Q P)
The second look at the Q3’17 Japanese GDP report is expected to show the world’s third largest economy grew by +1.5% on an annualized basis, down from +2.5% produced in the first reading. Given that Japanese Prime Minister Shinzo Abe just received a fresh electoral mandate in election a few weeks ago, underperformance in Japanese growth could spur a fresh wave of speculation that new economic stimulus measures could be in the cards for 2018. We’ll need to see the Q4’17 Japanese GDP report before said speculation can be taken seriously, but that won’t be released until January.
Pairs to Watch: AUD/JPY, EUR/JPY, GBP/JPY, USD/JPY, Gold
11/15 Wednesday | 13:30 GMT |Â USDÂ Advance Retail Sales & Consumer Price Index (OCT)
Consumption is the most important part of the US economy, generating nearly 70% of the headline GDP figure. The best monthly insight we have into consumption trends in the US might arguably be the Advance Retail Sales report. In October, according to a Bloomberg News survey, consumption was flat the headline Advance Retail Sales due unchanged from the previous month. The Retail Sales Control Group, the input used to calculate GDP, is due in at +0.3% from +0.4% (m/m).
