GBP

The pound remains on the backfoot in early trading after losing around half a cent against both the dollar and euro yesterday, as it was hurt by Brexit headlines and cautious markets ahead of the Bank of England rate decision on Thursday. French President Macron said yesterday evening that he was postponing trade sanctions on the UK so that negotiators from both sides could work on new proposals to defuse their dispute over post-Brexit fishing rights. Britain’s Brexit chief Lord Frost will head to Paris for talks on Thursday.

EUR

The Euro has reversed yesterday’s falls against the dollar overnight. The Dow Jones and S&P 500 indexes both hit all-time highs on Monday and the risk positive environment made it difficult for the greenback to preserve its strength. Manufacturing Purchasing Managers index for both Germany and the bloc are released later today, and markets will also take note of a speech by Dutch ECB policymaker Frank Elderson.

USD

Data released yesterday showed that US manufacturing activity slowed in October, with all industries reporting record long wait times for raw materials, indicating that supply chains continued to constrain activity in the fourth quarter. Longer waits for materials has meant higher inflation and although Federal Reserve Bank Chairman Jerome Powell has repeatedly argued this is temporary, markets will look ahead to tomorrow’s central bank meeting for clues to see if more persistent inflation is a concern.

Economic Calendar

10.00 am EUR Manufacturing PMI index
10.00 am GER Manufacturing PMI index
11.30 am ECB’s Elderson speech