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UK's Political Instability Returns to Focus as MPs Debate on Brexit Bill Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Mon Nov 13 17 00:41 ET

While maintaining a consolidative mode, risk is to the downside for the British pound. In Asia Monday we have witnessed its decline, erasing most of the gains made last week, ahead of a busy week. Following the second reading on September 11, the EU (Withdrawal) Bill 2017-19 would be put before MPs' consideration in a Committee of the whole House on the coming Tuesday and Wednesday. Rigorous debate is expected as many policymakers have already indicated that they would propose numerous amendments. Meanwhile, many MPs have insisted that a binding vote on the final divorce deal in the Parliament is a must. Political uncertainty in the UK has shown signs of heightening. Local media reported over the weekend that a total of 40 Tory MPs have agreed to sign a letter of no confidence in PM Theresa May. 48 MPs are required to force a new leadership vote, though. Adding to the chaos was the leak of "secret letter" by Boris Johnson and Michael Gove to pressure a hard Brexit. It was reported that a number of ministers were unnerved by stance and the language used in the letter.

A number of macroeconomic data would also be released in the UK throughout the week. Tuesday comes the inflation report. Headline CPI probably accelerated to +3.1% y/y in October from +3% a month ago. Core CPI might have rose ot +2.8% y/y from +2.7% in September. Meanwhile, RPI might have accelerated to +4.1% y/y from +3.9% in September. PPI inflation is expected to have slowed down in the month. UK's employment data would be due Wednesday. Jobless claims probably increased +2.4K in October, up from +1.7K a month ago. The ILO unemployment rate probably stayed unchanged at 4.3% in the three months through September, while the number of payrolls increased +50K during the period (easing from a +94K addition a month ago. the growth of average weekly earnings might have moderated to +2.1% y/y I the three months through September, from +2.2% previously.

While overshooting of inflation has been a concern of the BOE which hiked the policy rate earlier this month to tackle the problem, persistently weak inflation has worried some of the Fed members. US inflation report, due Wednesday, probably shows moderation of headline CPI to +2% y/y (+2.2% in September) in October. Core CPI might have steadied at +1.7% for the month. The US would also release October's retail sales and November's empire state manufacturing index on the same day. A number of Fed officials would be speaking throughout the week. Fed Chair Janet Yellen and Chicago Fed President Charles Evans would deliver speeches at an ECB conference on "Communications Challenges for Policy Effectiveness, Accountability and Reputation", while St. Louis' Fed's James Bullard be speaking on the US economy and monetary policy, on Tuesday. The new Atlanta Fed President Raphael Bostic would also be speaking on the same day. Governor Lael Brainard, Dallas Fed's Robert Kaplan and San Francisco Fed's John Williams are also due to speak this week.

In Asia Pacific, China's macroeconomic data would released on Tuesday. Retail sales probably expanded +10.5% y/y in October, up from +10.3% a month ago. IP growth probably eased to +6.2% y/y, form +6.6% in September. Urban FAI might have grown +7.3%, down from +7.5% in September. Japan would release its GDP growth for 3Q17, together with the IP growth for September, on Wednesday, the focus of Australia is on the employment report due Thursday. The number of payrolls probably increased +18.9K in October, compared with a +19.8K addition a month ago. The unemployment rate should have stayed unchanged at 5.5% for the month.


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