by SignalFactory · November 17, 2021 | 13:56:55 UTC
UK inflation, as measured by the consumer price index, jumped to 4.2% in annual terms in October, well above expectations of a rise to 3.9%. The Office for National Statistics, which compiles the data, said the surge to an almost 10-year high was driven by increased household energy bills, a rise in the cost of second-hand cars and fuel, as well as higher prices in restaurants and hotels.
GBP initially strengthened in the aftermath of the data, with EUR/GBP dropping below 0.8400 to its lowest level since February 2020.
Bank of England impact – At the meeting earlier this month, the Bank of England decided to keep the Bank Rate unchanged at a record low of 0.1%, despite some strong signals that they would consider hiking rates. In testimony to MPs earlier this week, the Bank of England Governor Andrew Bailey said all meetings are “live”, suggesting that they could raise interest rates when they meet next month.
The CME’s BoEWatch tool is showing markets are pricing in 100% probability of a rate hike in December. The tool uses MPC SONIA futures prices to gauge market expectations of the future course of BoE monetary policy.
Investec Economics’ Ellie Henderson: “With CPI inflation moving further away from the Bank of England’s 2% target, there is now even more pressure on the MPC to act to rein in price growth at its upcoming December meeting.
“Following this release, market expectations have also increased further out, pricing a 75% chance of a 25bp increase to 0.50% in February, as is our base case.”
Lloyds – “An extended period of above-target inflation and indications that the labour market remained strong after the furlough scheme ended means that a Bank of England interest rate rise next month remains in play.”
UK jobs market resilient despite the end of the furlough: The number of workers on UK company payrolls has risen sharply despite the end of the government’s furlough scheme, with a record increase in people moving from unemployment into work due to the scheme’s end.
The Office for National Statistics (ONS) said Britain’s employers had added 160,000 more workers in October, taking the total to 29.3million in the first month after the wind-down of the wage subsidy scheme.
The UK unemployment rate fell by more than expected, dropping to 4.3% for the three months to the end of September, from 4.5% in August. However, the rate remains above the pre-pandemic level of 4%.
The figures come after the Bank of England declined to raise interest rates earlier this month while they waited to assess the impact of the furlough ends.
Some analysts are now seeing the employment figures as a green light for an interest rate rise before Christmas if the next jobs figures on 14th December are strong. BoE policymaker Johnathan Haskel had hinted in a speech yesterday that the labor market would be key to the bank’s next move.
Eurozone growth meets analyst expectations: The latest eurozone GDP figures came in at expectations for the third quarter, but analysts have seen a slowdown in growth.
Pantheon Macroeconomics warned that economic growth, which accelerated in the third quarter, has started a sharp slowdown. “We look for growth of just 0.8% quarter-on-quarter in Q4, which, barring any further revisions, would mean that over the year as a whole the EZ economy expanded by 5.0% this year,” said Melanie Debono, senior Europe economist.
“The risks to our forecast are square to the downside and include ongoing supply constraints, particularly in the manufacturing sector; slow growth in China; the energy crunch and rising virus cases.”
EUR/GBP Short (Sell) Ente At: 0.83922 T.P_1: 0.83393 T.P_2: 0.83003 S.L: 0.84754
All information on this website is of a general nature. The information is not adapted to conditions that are specific to your person or entity. The information provided can not be considered as personal, professional or legal advice or investment advice to the user.
Signal Factory is not represented as a registered investment consultant or brokerage dealer nor offers to buy or sell any of the financial instruments mentioned in the service offered.
While Signal Factory believes that the content provided is accurate, there are no explicit or implied warranties of accuracy. The information provided is believed to be reliable; Signal Factory does not guarantee the accuracy or completeness of the information provided. Third parties refer to Signal Factory to provide technology and information if a third party fails, and then there is a risk that the information may be delayed or not delivered at all.
All information and comments contained on this website, including but not limited to, opinions, analyzes, news, prices, research, and general, do not constitute investment advice or an invitation to buy or sell any type of instrument. Signal Factory assumes no responsibility for any loss or damage that may result, directly or indirectly, from the use or dependence on such information.
All information contained on this web site is a personal opinion or belief of the author. None of these data is a recommendation or financial advice in any sense, also within the meaning of any commercial act or law. Writers, publishers and affiliates of Signal Factory are not responsible for your trading in any way.
The information and opinions contained in the site are provided for information only and for educational reasons, should never be considered as direct or indirect advice to open a trading account and / or invest money in Forex trading with any Forex company . Signal Factory assumes no responsibility for any decisions taken by the user to create a merchant account with any of the brokers listed on this website. Anyone who decides to set up a merchant account or use the services, free of charge or paid, to any of the Forex companies mentioned on this website, bears full responsibility for their actions.
Any institution that offers a service and is listed on this website, including forex brokers, financial companies and other institutions, is present only for informational purposes. All ratings, ratings, banners, reviews, or other information found for any of the above-mentioned institutions are provided in a strictly objective manner and according to the best possible reflection of the materials on the official website of the company.
Forex trading is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against merchants. Before each Forex investment, you should carefully consider your goals, past experience and risk level. The opinions and data contained on this site should not be considered as suggestions or advice for the sale or purchase of currency or other instruments. Past results do not show or guarantee future results.
Neither Signal Factory nor its affiliates ensure the accuracy of the content provided on this Site. You explicitly agree that viewing, visiting or using this website is at your own risk.