UK inflation held steady at 6.7% in September, exceeding expectations of 6.5%. The inflation rate is currently the highest in G7, as transport costs rebounded.
Yesterday, the Office for National Statistics published figures that documented annual growth in regular pay (excluding bonuses) was 7.8% in the three months to August, rising above inflation for the first time in almost two years.
In China, the economy grew at a faster rate than expected in the third quarter of 2023 as retail sales rose the most in four months. GDP expanded 4.9% year-on-year in the three months to September, exceeding forecasts of 4.4% and offering hope that it will meet the annual target of 5% this year.
Following a brighter German outlook and weak UK pay data yesterday, the pound lost 0.3% against the euro yesterday but has regained some strength this morning following inflation figures.
Against the US dollar, the pound remains on the back foot, holding on to modest gains, as stronger-than-expected US retail sales data lifted the greenback.
German investor morale appeared more optimistic in October as the ZEW economic sentiment index surged by 10.3 points to reach -1.1 this month, significantly trumping expectations of -9.3. This is the most optimistic reading since April 2023 and suggests Europe’s largest economy has overcome its recent downturn.
US retail sales rose by 0.7% in September, exceeding expectations of +0.3% and following a revised 0.8% increase in August. The reading indicates strong consumer spending despite high inflation and a cooling labour market.
This evening, several speeches are scheduled with Federal Reserve policymakers Waller, Williams and Bowmans, which may shed light on what chair, Jerome Powell will have to say on Thursday.
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