The markets were trading relatively quiet yesterday with the main events of the day coming from the BoE Governor Carney’s comments and the Eurozone inflation data. The British pound was seen trading weaker yesterday on the back of the comments from Carney.
Speaking of inflation, Carney said that Brexit would prove to be an inflationary event as the central bank prepares to hike rates. He cautioned that although the intention was Brexit was not to isolate Britain from the rest of the world; the initial outcome would be similar due to uncertainty in trade ties with Europe.
The euro managed to make some gains, especially against the British pound as latest inflation data from Eurostat showed that consumer prices in the Eurozone surged to a four-month high at 1.5% in August. Interestingly, the ECB’s monthly bulletin, however, showed that due to a statistical quirk, inflation in the eurozone could fall to below 1% in the first quarter of 2018. That did not dent the sentiment in the euro which managed to hold on to the gains.
Looking ahead, economic data today will see the release of the US building permits data and housing starts. Overall, the day looks a bit relaxed, but investors are likely to turn cautious as the Fed’s two-day monetary policy meeting starts today.
