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Inflation Expectations and New Covid Cases; Poor Retail Data

British Pound Weekly Fundamental Analysis: Mixed

  • Retail sales continue to decline as September data worsens than expected.
  • Markit PMI remains strong as inflation indicators skyrocket, but consumers become more pessimistic
  • November price hike raises market prices, surpassing 50,000 new daily Covid cases -Highest in Europe

Has many driving factors and potential drawbacks lb Sterling justifies a more cautious approach to the pound sterling-based setting as it approaches the November 4 rate decision.

Household goods stores lower retail sector

UK retail sales in September were significantly lower than expected compared to September last year. The 1.3% reduction, led by the lack of numbers from “non-food retailers,” weighed heavily on the wider sector as it was projected to shrink by only 0.4%.

For all data releases and events that drive the market DailyFX Economic Calendar

The current series of declining retail data is described by the National Bureau of Statistics (ONS) as “the longest consecutive monthly fall period in the history of this series (beginning in February 1996).” I am.

Breakdown of retail sales data

Source: National Bureau of Statistics (ONS)

PMI emotions are different from consumer emotions

Flash (provisional) Markit PMI data exceeds expectations in both manufacturing and service industries. Both measurements are above 50 and purchasing managers anticipate expansion in both sectors.

However, consumer confidence measures tell a different story than the ones posted (-17). The survey is positive and asks a sample group of 2000 consumers to measure their personal financial position and overall economic environment over the next 12 months.

econ calendar

Inflation expectations

One additional factor in consumer pessimism identified in Gfk’s research is current and future price levels. Due to global supply chain challenges and rising demand, fuel and gas prices continue to rise and are passed on to consumers. Forty-eight percent of respondents expected prices to rise sharply over the next 12 months, compared to 34% in September.

father Bank of EnglandHuw Pill, the new Chief Economist of the UK, said the UK could exceed 5% “very unpleasant”. inflation Please read over the next few months. Following these comments, there was a more cautious disclaimer, stating that the Chief Economist was “currently a little too excited to focus on interest rates.”The market was priced with 95% volatility interest rate I hiked at the November meeting, but after Pill’s comment, this dropped to just over 57%.

BoE rate Hiking the Implicit ProbabMelities

Implicit probability of interest rate hike

Source: Refinitiv

Daily new Covid case exceeds 50k again

With the rapid deployment of the Covid vaccine, the UK may have less need to withstand another strict blockade when the number of cases surges and temperatures drop. That said, a surprising number of new infections could evoke government response, and pub and restaurant capacity limits have been reintroduced, leveling infection rates.

New UK Daily Covid Infection

New Covid case in the UK

Source: Refinitiv

While next week is a relatively mild week for high-impact GBP events, keep in mind that speech / development before and after the November 4 MPC meeting can help boost volatility.

Eco calendar one week ahead

GBP / USD Weekly chart

GBP / USD Weekly Chart

Created chart Richard Snow, IG

— Written by Richard Snow for DailyFX.com

Contact Richard on Twitter to follow us. @RichardSNSowFX



Inflation Expectations and New Covid Cases; Poor Retail Data

Source link Inflation Expectations and New Covid Cases; Poor Retail Data

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