Good morning,

The British pound has held above the 1.18 mark for second time this year. It will be interesting to see if it follows a similar trend to August and drops off over the next week. This comes as a little surprise as MPC member Silvana Tenreyro has voiced her opinion that the current surge in UK inflation levels are temporary. This is important at a general level, because if MPC members see sustained high levels of inflation there is pressure to increase interest rates. Tenreyro’s comments will see her casted as a dove as she is unlikely to vote for higher interest rates. Markets around the world have the UK as one of the front runners for an interest rate increase which has helped the pound to get above 1.18 on EUR and 1.37 on USD.

The US had some good news out today. The number of Americans filing new clients for unemployment benefits dropped below 300,000. This is the first time this has happened in 19 months. There seems to be a continued theme following on from the nonfarm payrolls figures out last week that the US is facing worker shortages. Tuesday’s reports revealed that there were 10.4 million job openings at the end of August yet the nonfarm figures were lower and unemployment benefits numbers are down.

Friday sees more data out of the US with September’s Retail Sales being published. Expect to see a much smaller figure than August with summer ending and a new season beginning.

Have a great weekend.

Josh Saunders, Senior Relationship Manager.

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