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The pound lost ground yesterday, following surprise news that the EU ambassador Sir Ivan Rogers had resigned. In his resignation letter, he took a swipe at Government plans, stating a need to challenge ‘ill-founded arguments and muddled thinking’. Rogers was due to step down in November after serving a 4-year term, and was also part of advising David Cameron on his EU deal before the referendum. The pound suffered on the sentiment that a clear plan is not in place, as we move closer to the triggering of Article 50.
Minutes from December’s FOMC meeting
Today, the main focus will be on FOMC minutes from December’s meeting. The main focus will be on discussions surrounding the outlook for 2017, especially as the tone of the December meeting was more hawkish than expected. Yesterday, US data showed that US manufacturing rose in December and new orders picked up significantly, boosting USD.
HICP Inflation data to come
From Europe today we have HICP Inflation data which will be of note, especially given Germany’s strong HICP Inflation feedback yesterday. It is expected that HICP inflation will come in at 1.2% year on year in December, which is a revision up from 1%, and core inflation increasing to 0.9%.
As we stand, even if we see inflation moving higher in Europe, it is likely that the ECB will look through this for now, and not consider tapering their QE programme.
