This morning, UK consumer price inflation was released at 0.6% which beat the predicted figure of 0.4%. This has given the Pound some support after losing out on some of its recent gains against the Euro. The government has announced a ban on Huawei from the UK’s 5G networks and will remove their equipment by 2027 which has increased tensions between the UK and China. A group of MPs have raised concerns that the government will struggle to keep its promise of allowing ‘unfettered’ trade between Northern Ireland and the rest of the UK.
Eurozone industrial production figures came out worse than expected at 12.4% compared to the forecasted figure of 14.9%. ZEW economic sentiment indicators were also released at the same time with Germany seeing a slight decline whilst the Eurozone as a whole has improved. This has led to the Euro strengthening against the Pound and the Dollar. German Chancellor Merkel has reiterated that an agreement on the proposed EU recovery fund is urgent and needs to be done as soon as possible to give the Eurozone a much needed economic boost.
Even though US consumer price inflation beat the market’s expectations at 0.6%, this did little to help the Dollar as the greenback weakened against the Pound and the Euro as the market focused on optimism over a potential coronavirus vaccine. However, the Dollar remains volatile due to its safe-haven status as President Trump has signed a bill that will sanction Chinese officials and end the preferential treatment of Hong Kong which has increased tensions between the US and China. China has threatened to retaliate by imposing sanctions of its own on US entities and individuals. FOMC member Kaplan has said that the economic recovery that was hoped for in the US has been rather muted and undermined by the increase in coronavirus cases across the country.