EUR/GBP News, Oct. 11-15, 2010

EUR/GBP

Last week the euro was quite unstable against the sterling as it fluctuated throughout the week. Last Monday its opening price was 0.8706 pounds and after several hesitant moves it reached the closing price of 0.8729 on Friday. This Monday, however, it started to decrease as it began the week at 0.8769 and is currently 0.8740 and falling.

According to Bloomberg, “The pound weakened against the euro before a measure of U.K. inflation is released tomorrow and as investors speculate the Bank of England may restart its asset- purchase program to bolster the economic recovery.”

Elizabeth Gregory, a market strategist at ACM Advanced Currency Markets in Geneva, said: “CPI has been stubbornly high at more than 3 percent and eventually the BOE may be swayed by Sentance’s view that we need to start hiking rates.”

Tuesday

CPI y/y, 9:30 a.m. GMT. The CPI is considered the UK’s most important inflation data because it’s used as the central bank’s inflation target. Data for this index is derived as the average price of various goods and services are sampled and then compared to the sampling done a year earlier. Experts say the index will remain at 3.1% this month, as well.

MPC Member Miles Speaks, 9:30 a.m. GMT. BOE=Bank of England, MPC=Monetary Policy Committee. The external BOE MPC Member David Miles will speak on at the Economic and Social Research Institute Conference in Dublin on Tuesday. This is an important event because BOE MPC members vote on where to set the nation’s key interest rates.

Trade Balance, 9:30 a.m. GMT. The index measures the difference in value between imported and exported goods. A positive number indicates that more goods were exported than imported. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. This month experts say the index will show an increase in the exports as it will go up from -8.7B to

-8.0B.

Inflation Report Hearings, tentative. The event is of a high impact: during the hearings the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee.

Nationwide Consumer Confidence, 12:01 a.m. GMT (Thursday morning). This is the level of a composite index based on surveyed consumers. The data for this index is derived via a survey of 1,000 consumers who rate the level of current and future economic conditions. The index is important for traders because the financial confidence is a leading indicator of consumer spending. An increase is expected this month – from the current 61 points to 64.

Wednesday

Claimant Count Change, 9:30 a.m. GMT. This is also called Jobless Claims. The index measures the change in the number of people claiming unemployment-related benefits during the previous month. The number of unemployed people is a significant indicator of economic health. When the index’ number is rising, this is bad for the  economy and this is what we expect this month – a rise to 3.9K from the current 2.3K.

Average Earnings Index 3m/y, 9:30 a.m. GMT. The Average Earnings measures the change in the price businesses and the government pay for labor. It is a leading indicator of consumer inflation because when businesses pay more for labor, the higher costs are passed on to the consumer. The forecast for the month is 1.6% as the current value is 1.5%.

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