Good morning
UK inflation this morning offered a welcome relief, coming in lower than expected with headline CPI at 2.5% and core at 3.2%, both 0.2% lower than anticipated. GBP initially traded lower but has actually rallied a little since the release, GBPUSD now 1.2230, despite the fact that the improved numbers could give scope for BoE to cut rates when they meet next month. GBP is a touch higher against EUR, now 1.1860 from an overnight low around 1.1840.
The inflation numbers take a little pressure off Chancellor Reeves, who has not ruled out an emergency budget in March as she desperately tries to balance the books. She says she is committed to borrowing rules announced in October but if the numbers don’t add up then she’ll have to take some action.
South Korea’s ‘President’ Yoon has been arrested after authorities finally broke into his home. Yoon says the arrest is illegal, while political opponents obviously regard his arrest as lawful. Yoon has previously tried to declare martial law in Korea.
In the UK, Tulip Siddiq has resigned as Treasury Minister, a role in which she would be tackling corruption, however she herself is embroiled in a corruption investigation over links to her Aunt, who was ousted last year as Bangladesh’s PM amid claims her family embezzled nearly £4bn from what should have funds spent on infrastructure in Bangladesh. USDKRW is off its recent highs, now 1,460,but still around historically high levels.
There seems to be some better news coming from Israel/Gaza, where we seem to be on the verge of a ceasefire deal although we all know that until an agreement is actually signed anything can happen. Indeed, even if there were to be a ceasefire, it doesn’t mean peace will suddenly fall on the region. Still, we hope for good news.
Meanwhile NATO are ramping up their efforts to protect vital undersea cables. Several cables have been damaged in recent weeks, with Russia being the main suspect. The ‘Baltic Sentry’ mission will see increased surveillance of ships and NATO has vowed it will be whatever it takes to ensure the safety and security of infrastructure.
Nottingham Forest drew with Liverpool yesterday evening. Forest had taken the lead but just couldn’t hold out as Liverpool piled on pressure in the second half. A highly entertaining match. Spurs take on Arsenal this evening, both teams desperate for points but for very different reasons. Arsenal could close the gap on Liverpool at the top, while a win for Spurs will see them climb up to a heady 12th place in the league. Arsenal are firm favourites, now is not the time to be confident of Spurs although they are equally capable of an upset as they are in losing heavily.
This afternoon brings the latest US CPI inflation numbers. Yesterdays US PPI came in a little softer than expected but still higher than the previous readings. We are braced for some USD volatility on the release given the uncertainty over the potential for Fed rate cuts this year. We have plenty of Fed officials speaking after the announcement, always interesting to see what their take is. I wouldn’t be at all surprised to see USD a little firmer heading into the CPI release.
Overnight we’ll have the latest Aussie employment numbers, AUD has seen a bit of strength in the past week or so, helped by the reports of a graduated US tariff implementation. GBPAUD currently around 1.9700, AUDUSD on the 0.6200 level. UK GDP is out early tomorrow morning, not the major quarterly data but still there is potential for a bit pf volatility, particularly if it comes in below the 0.2% expected.
Have a great day
- 10.00 EU industrial production
- 13.30 US CPI, NY empire state manufacturing
- 14.00 Feds Goolsbee speaks
- 15.00 Feds Kashkari speaks
- 16.00 Feds Williams speaks
- 19.00 Fed Beige book
- 00.00 AUS consumer inflation expectations
- 00.30 AUS employment
- 07.00 UK GDP, industrial production
- 07.00 German HICP
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