North Korea

The ongoing tensions on the Korean peninsula are likely to set the tone for financial markets throughout the week. Markets remained jittery all last week, with equities and other risk assets enduring bouts of selling after a fresh nuclear test and threats of the US receiving more “gift packages” from the Pyongyang regime.

Bank of England

The Bank of England will meet to decide interest rates this week, with the announcement due at the usual time of midday on Thursday. Expectations that the Monetary Policy Committee is moving closer to raising rates has been tempered by a slight slowdown in inflation and concerns that growth is precarious. Policymakers are expected to leave the Bank Rate unchanged at 0.25% and make no adjustments to the size of the asset purchase programme.

The pound has been sensitive to rate hike speculation but with MPs sitting and scrutinising Brexit talks again, politics could be the chief driver of sterling crosses over the coming weeks. Nevertheless, markets will be keen to see what, if anything, the Bank has say about the path of growth and inflation.

UK Inflation

With the Bank announcement on Thursday, the CPI inflation report on Tuesday will be closely monitored for any signs of mounting pressures on prices. After peaking in May at 2.9%, CPI inflation has since eased back to 2.6% in June and July.

US Inflation

US CPI inflation data for August is due on Thursday, with the numbers eyed as the last piece of the puzzle ahead of the Federal Reserve meeting the following week. Persistently sluggish inflation has dampened expectations for a third rate hike this year. The headline CPI reading eased up by just 0.1% in July, missing expectations for a 0.2% rise. Core PCE inflation, the Fed’s preferred measure, slid back to 1.4% in July from 1.5% in June, extending a run of slowing price growth that has persisted for most of the year.

Source: ETX Capital

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