Yesterday’s GDP data revealed that the UK’s economy expanded 0.5% in October. This marked the biggest increase in nearly a year and was above forecasts of 0.4% and follows a 0.6% contraction in September.
The big news today however, comes from unemployment which edged higher to 3.7% in the three months to October, from 3.6% in the previous period. This morning’s data matched market forecasts.
The ONS also reported that on the wage front, both total pay (including bonuses) and regular pay (excluding bonuses) increased 6.1%. This is the strongest growth rate for regular pay outside of the coronavirus pandemic period. However, adjusted for inflation, total and regular pay both fell by 2.7% in the three months to October.
Tomorrow, markets are expecting the latest inflation rate to edge down gently to 11.% ahead of the BoE’s big interest rate decision on Thursday. In October, the UK’s annual inflation rate jumped to 11.1%, its highest rate in 41 years.
Analysts from Danske Bank are expecting the BoE to return to a slower hiking pace this week. They suggest that a slightly dovish BoE and a hawkish ECB decision on Thursday should trigger gains for the EUR/GBP currency pair during the day. Markets will be watching closely for both the pound and euro’s movements.
Earlier this summer, Germany’s economy minister, Robert Habeck, announced a target of 20% savings for the country’s gas consumption. Last week, reports came in that the 20% target was missed, pointing to the risk of gas shortages for Germany this winter.
After six consecutive rate hikes, it looks as though the US Federal Reserve will be taking a more dovish stance towards monetary policy in Thursday’s interest rate decision. This week’s rate hike is likely to be a less-hawkish 50-basis point increase, rather than the 75 basis points we have seen in previous hikes.
Later today the US Consumer Price Index (CPI), is expected to fall from 7.7% in the previous month’s reading to a 7.3% YoY consensus.
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