The day kicks in with GBP in focus ahead of BoE Governor Carney’s speech due today. The currency markets experienced little movement on Monday, with no key US economic reports in the pipeline to drive volatility. Most importantly, Fed President Janet Yellen will not be speaking until the market closes on Friday. Political play is the only hope for some volatility in the dollar. Not to mention that there’s a 90% chance that Yellen will lose Federal Reserve presidency in February, and her latest comments were qualified as ‘hawkish’, suggesting that there’s plenty of room for gradual rate hikes.
In Europe, the week ahead projects as a quite active one for the GBP, with BoE Governor Carney speaking today. Unlike the greenback, there’s quite a big potential for intraday swings today on GBPUSD, in light of the Brexit news. According to Bloomberg, ‘without a clear sign that negotiations will progress to trade and transition arrangements by December at this week’s summit of EU leaders, the entire Brexit process will be in danger to collapse’. As Brexit talks advance, the lookout on the economy and monetary policy could overshadow Brexit risks.
Consumer prices are also in the pipeline for this week, and as the PMIs highlight, price pressures gained pace in September, convincing the Bank of England to support a rate hike. Along with Carney’s speech, labour and consumer spending statistics are also due for release. Analysts are hopeful that all these events will cast a positive light on the sterling.