Cornhill FX Morning Report - 23rd October 2017
European Central Bank in focus ahead of Thursday’s decision and press conference...
Financial markets will focus on this week's European Central Bank meeting for further details on how the central bank plans to taper its huge stimulus program. The ECB are ready to act but are attempting to begin their tapering process with as little impact on the euro as possible. This comes after the euro’s recent ascent which has seen it gain nearly 8% against the greenback since the French election in May. The market is prepared for a taper but just how aggressive, in other words how dovish or hawkish it is, will define how the euro reacts.
Rates - 08:00 London
GBP/USD 1.3180 GBP/EUR 1.1210 EUR/USD 1.1750
Meanwhile, traders and dealers alike will keep an eye on a the preliminary reading of 3rd quarter U.S. growth to further assess what the impact of hurricanes Harvey, Irma and Maria had on economic activity and how it could affect the Fed’s view on monetary policy moving forward. The US dollar has seen some recent support on the back of stronger economic numbers and the prospect of tax reform; this week’s number could offer a further boost to a currency which has generally had a tough-time in 2017.
In the UK, investors will focus on the first estimate of 3rd quarter GDP for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates next month. Elsewhere, Japanese inflation data will be in focus as participants assess the need for further stimulus.
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