Following yesterday’s stronger than expected inflationary figures, Sterling remains a cent higher against the Euro and 2 cents higher against the US Dollar. With little economic data today its likely exchange rates will remain intact unless further news on Brexit emerge.
UK retail sales and the Brexit affect
Tomorrow’s retail sales could bring some surprises, whilst expectations are for figures to fall to 4.8%, down from 6.2% for the month of September YOY, we could begin to see the impact of Brexit on consumer confidence and thus spending. Any significant deviation from 4.8% could spell trouble for the UK economy post-Brexit and may rattle investor decisions.
With the recent fall in the Pound’s value and warnings that consumer prices could increase, there is an argument that retail spending could fall.
ECB interest rate decision
Following the UK’s retail sales, Mario Draghi will shed some light on the current economic conditions within the Eurozone coupled with a verdict on the Eurozone’s interest rate. Although its not expected that changes to current rates will occur its widely expected that the ECB will make changes to its QE programme in the near future. Any changes that may arise on Thursday could equate to Euro weakness.
Is it the last chance for the Trump campaign?
With the news that Paddypower will pay out early to those that placed bets on a Clinton victory, it would appear that a Trump victory is highly improbable.
That being said, he may have some tricks up his sleeve at the last live TV debate this week which could swing voter decisions as we approach the finish line in November. Even still, whilst most polls now hint towards a landslide in favour of Clinton it does come down to who votes on the day.
Similarly to what we witnessed with the UK’s Referendum in June, a Trump victory would be a major shock to the markets and I would envisage US Dollar weakness in the event Trump did pull out a surprise win. GBP/USD exchange rates could become volatile as we approach the final hurdles of the US elections which could present buying opportunities for those with Sterling.