The week really peaked yesterday as the UK’s GDP figures were released. GDP beat expectations and this will have provided a reprieve for Governor of the Bank of England, Mark Carney, and his colleagues. Carney has been hinting that there could be an interest rate rise in the ‘coming months’ and with GDP beating expectations, albeit only slightly, this should provide the Bank with the green light it needs. The pound jumped in the morning following the release and the market is now pricing in an 80% chance that rates will rise from 0.25% up to 0.5%. Any potential rise next week will not necessarily be the start of a series of hikes, but rather a move out of the current ‘emergency mode’ and crucially providing the central bank with some capacity as the Brexit 2019 deadline comes around. Brexit Secretary was also testifying in front of Parliament yesterday and most interestingly the Department for Exiting the European Union reiterated that the Brexit deal will be voted on by both the House of Commons and Lords before the European Parliament then votes.
Over in the US, core durable goods released for September much better than expected but it was a mixed day for the US dollar as it lost ground against a number of its European counterparts. The back end of the week is heavily weighted with unemployment claims out this afternoon before the high tier US GDP figures on Friday.