On Wednesday we saw positive news came from the United States with producer prices increasing by 0.2% in the previous month, which was in line with the expectations. It has offered an offset to a small decline in prices for goods. In addition, the core PPI rose 0.4% in September which is the highest increase since the beginning of the year.
Another positive news came from the UK where the UK economy rebounded in the 3 months to August and according to the ONS (Office of National Statistics), the economy grew 0.7 percent, picking up from the 0.6 percent expansion in the 3 months to July. In the report, the retail trade and wholesale showed strong growth due to the weather being warmer than usual in the summer months. As per the ONS head of GDP, Rob Kent-Smith, stronger economic rebound is supported by a positive performance of retail, food and drink production, as well as the house building, but the long-term growth still continues to lag behind the historical trend.
The largest contributor to the economic growth was the services sector, contributing to 0.42% to the overall growth, while the services sector grew by 1.6 percent in June-August, compared to the same months in 2017. The yesterday’s data most likely came as a relief to the BoE that has expected a modest economic growth, however the economists are warning about the possible slow-down in the 4th quarter due to significant political uncertainties and Brexit issues that are overshadowing the business investment.
Regarding Breixt, as per Reuters, the BoE has asked yesterday lenders in Britain to deliver 6 hourly checks on their balance sheets in the days after the possible no-deal Brexit in order to prevent an unexpected crush in credit supply, where the checks will include deposit checks, loans and derivative exposures, and any changes in the cost of funding and lending rates. The PRA (Prudential Regulation Authority) of BoE regularly enhances the monitoring of lenders around significant events, where it took similar measure in the case when Scotland voted on its membership of the UK (2014) and Brexit referendum (2016).
ECONOMIC CALENDAR EVENTS FOR OCTOBER 11th
AUD RBA Assist Gov Ellis Speaks
ALL G20 Meetings
GBP BOE Gov Carney Speaks
GBP BOE Credit Conditions Survey
EUR ECB Monetary Policy Meeting Accounts
USD CPI m/m
USD Core CPI m/m
USD Unemployment Claims