European Open: UK inflation up next, GBP/USD headed for the pandemic low?

Matt Simpson financial analyst
By :  ,  Market Analyst

Asian Indices:

  • Australia's ASX 200 index fell by -171.4 points (-2.45%) and currently trades at 6,838.30
  • Japan's Nikkei 225 index has risen by 802.47 points (2.8%) and currently trades at 27,812.16
  • Hong Kong's Hang Seng index has fallen by -492.23 points (-2.55%) and currently trades at 18,834.63
  • China's A50 Index has fallen by -158.79 points (-1.17%) and currently trades at 13,375.37


UK and Europe:

  • UK's FTSE 100 futures are currently down -58.5 points (-0.79%), the cash market is currently estimated to open at 7,327.36
  • Euro STOXX 50 futures are currently down -26 points (-0.73%), the cash market is currently estimated to open at 3,560.18
  • Germany's DAX futures are currently down -98 points (-0.74%), the cash market is currently estimated to open at 13,090.95


US Futures:

  • DJI futures are currently up 58 points (0.19%)
  • S&P 500 futures are currently up 18.5 points (0.15%)
  • Nasdaq 100 futures are currently up 7 points (0.18%)




Renewed expectations of a higher terminal Fed rate saw Asian equity markets tumble in line with Wall Street. A 75bp hike next week has been fully priced I by money markets, with around a 33% chance of a 100bp hike now on the table. All major benchmarks across Asia were in the red with the tech-sensitive Nikkei 225 taking the lead at around -2.5%.


European futures around around -0.7% lower which points to a weak open for cash markets, whilst US futures are showing some signs of stability following their worst session since 2021.



UK inflation in focus at 07:00 BST

As markets are still reeling from the US inflation report, a hotter than expected CPI set for the UK could simply add to the panic. At least to a degree. The difference here though is that inflation is expected to rise (as opposed to soften like in the US) but in the current climate, a hotter than hot report could add further pressure to equity markets.


  • Core CPI is forecast to rise to 0.8% m/m (0.3% previously), and to 6.3% y/y (6.2% previously)
  • CPI is expected to rise to 10.2% y/y (10.1% prior) and to 0.6% m/m (0.6% previously)
  • PPI input is expected to rise to 22.4% y/y (22.6% prior) and 0.3% m/m (0.1% previously)



GBP/USD to buckle under higher inflation?

Whilst the prospects of higher Fed rates are favourable to the US dollar, the same cannot be said for the BOE’s need to hike and the British pound. With talks of a potential currency crisis, a recession and double-digit inflation in the UK, stronger inflation numbers simply exacerbate these issues.



A large bearish engulfing candle formed yesterday, and the hourly chart broke trend support with a blink of an eye. Prices have pulled back overnight but, with a resistance zone nearby (and the 200 and 50-bar EMA’s just above it) I would prefer to fade into spikes with a view of hopefully catching a move down towards the March 2020 low.


FTSE 350 – Market Internals:


FTSE 350: 4092.77 (-1.17%) 13 September 2022

  • 313 (89.43%) stocks advanced and 29 (8.29%) declined
  • 7 stocks rose to a new 52-week high, 5 fell to new lows
  • 31.43% of stocks closed above their 200-day average
  • 97.43% of stocks closed above their 50-day average
  • 15.43% of stocks closed above their 20-day average



  • + 9.75% - Jtc PLC (JTC.L)
  • + 5.58% - Future PLC (FUTR.L)
  • + 3.79% - Lancashire Holdings Ltd (LRE.L)



  • -14.59% - Ocado Group PLC (OCDO.L)
  • -9.27% - Ferrexpo PLC (FXPO.L)
  • -8.97% - Aston Martin Lagonda Global Holdings PLC (AML.L)



Economic events up next (Times in BST)



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