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Market Update

• Posted by currencies in Bank of England, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Rate Cuts, Rate Hikes, Sterling, UK, Uncategorised
• November 27, 2023
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Last week’s data releases provided strength for the Pound after a pretty downbeat month or so on the market- showing that UK PMI numbers were back over the 50 area, which means that the UK economy is no longer contracting- we may not see massive growth over the next year, however, a stagnating economy is much better than one in recession- which looks more likely for the Eurozone currently. On this basis, we can see GBPEUR exchange rates remaining positive for the here and now, with the BoE set to keep rates on hold until potentially the second half of 2024, as the UK economy strengthens, we can see that being attractive to many investors.

With December generally being a quiet month on the data front- the last week of December could be volatile generally with trade, and though we do not have heaps of data coming out, I have detailed below our main releases- on Monday we have a speech from ECB President Lagarde, we are not expecting any policy shift in regards to interest rates so I am not expecting to see much market movement on Monday on the Euro- however recent negative data may be mentioned which could potentially have an effect, but there is only a small chance of this.

On Tuesday we have German consumer confidence, where unfortunately we are expecting negative numbers, and as Germany makes up for 40% of the European economy then this could weaken the Euro slightly, the rest of Tuesday is filled with U.S based data (Consumer Confidence) and various Fed speakers- overall, not a volatile day to be expected.

On Wednesday we have the RBNZ interest rate decision where we are not expecting any movement on interest rates, later in the day we have European consumer confidence, UK mortgage approvals (Expected lower), and most importantly, U.S GDP numbers which are expected in pretty high which would be positive for the U,S and positive for markets.

On Thursday we have Eurozone core inflation with it expected to drop further to 3.9% which is very positive for the Euro, anything lower than this will boost the Euro more especially against the Dollar- we also have PCE Price index data out of the U.S, also expected lower, which will be positive for the U.S.

On Friday we have ISM Manufacturing PMI out of the UK which is expected to come in positive, and a speech from Fed Chair Powell on Friday afternoon. All in all it could be a volatile week so please don’t hesitate to contact me if you require any addiitonal guidance.