Good morning,

Sterling on sale and so is the High St

Sterling’s rally has paused in the past 24hrs with investors wanting more than a slightly better than expected unemployment number and the end of the Article 50 court case before adding more GBP to their portfolios. Today’s retail sales numbers may further drive the narrative that the UK shopper is loading up on goods and services in anticipation of higher prices while areas of retail that benefit from increased tourism are expected to also do well. As we highlighted in response to Tuesday’s inflation numbers the impact of Brexit on the High St has not yet been felt; suppliers upping prices, businesses having to pay more in salaries courtesy of the government’s ‘living wage’ program and an ever increasing credit bubble could all pressurise sales volumes.

We will find out whether the first signs are already showing this morning at 09.30.

Trump hints at refusal to accept election result

Overnight, Donald Trump and Hillary Clinton debated the whys and wherefores of who was the best person to lead the US for the next 4 years. Waking up at 1.55am to watch barely political theatre will always be a surreal experience but to this sleep-addled Brit, I thought Donald Trump had his best debate while Hillary Clinton was a lot quicker to snipe back with personal attacks. Unfortunately for the Republican candidate the wheels came off as he continued to insist that the vote was already rigged and that he would not commit to accepting the result of the vote on November 8th.

This is yet another squirt of chocolate flavoured crazy on to the toxic political ice cream sundae that is this election and the likely currency fall out from a candidate in a developed nation such as the US actively campaigning against the result could be a sight to see. Our webinar on the election and how it could affect your business is next Wednesday and you can sign up here or by clicking the banner at the top of this email.

Currency markets saw a decent strengthening of the Mexican peso as the debate ended but once again we countenance that the views of Asian currency traders and insomniac Europeans do not make an exit poll. The moves however do reinforce our belief of broad yen strength in the event of a Trump win in 6 weeks’ time and measured dollar weakness should Clinton emerge victorious.

ECB set to reiterate plans for accommodation

From US politics to the relatively staid world of the European Central Bank and the latest policy meeting of Draghi and the team. Today’s European Central Bank meeting is unlikely to see policy shifted – we believe any changes will take place in December given the access to fresh economic forecasts – however we think there is a decent chance that comments from Mario Draghi will be allowed to take the euro lower.

Chatter about a ‘tapering’ of the European Central Bank’s bond buying program is somewhat premature in our eyes and we believe that Draghi will use the press conference to outline the Bank’s continual commitment to its easing policy.

EURUSD remains below 1.10 and can easily retreat lower in our eyes.

Have a great day.

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