The pound may have recovered well after its crash on Monday but the heightened volatility isn’t exactly a good sign for the currency itself, as it is arguably a sign that traders are shouting for more credible policy between the central bank and the government. The dollar is little changed so far today after backing away from its highs in the past two days, with month-end and quarter-end trading also in focus. The swings are likely to continue today so that will make it tricky to interpret things until we get to next week.
All eyes will stay on the bond market as a signal for broader market sentiment but as mentioned above, there might be mixed flows taking place with month-end and quarter-end rebalancing also something to consider. The technicals are your best friend in these sorts of situation, so that will at least help provide some guidance amid the recent bout of volatility ahead of the weekend.
Looking ahead in Europe, the euro and ECB outlook will be a focus point as we get French and overall Eurozone inflation data for September. The latter might have the propensity to surprise on the high side, and perhaps hit double-digits – just as what we saw with the German figures yesterday here.
0600 GMT – UK Q2 final GDP figures
0600 GMT – UK September Nationwide house prices
0645 GMT – France September preliminary CPI figures
0700 GMT – Switzerland September KOF leading indicator index
0755 GMT – Germany September unemployment change, rate
0830 GMT – UK August mortgage approvals, credit data
0900 GMT – Eurozone September preliminary CPI figures
0900 GMT – Eurozone August unemployment rate
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.