GBP got off to a bit of a weak start last week following what could only be seen as a change in tone from the BoE chief, Mark Carney, who cut growth forecasts the week before. By Friday, though, Sterling had managed to reverse its poor fortunes somewhat, particularly on the back of inflation data which showed a rise to 1.3% in October – an increase from 1.2% in September. Retail sales numbers also beat expectations when they came in at 0.8% last month – 0.5% better than expected. Year on year, there has been a considerable increase to 4.3% in retail sales which is far higher than the preceding 2.8%. Consumer spending is seen as key to the UK’s recovery so the more people get spending this holiday season the better it is for the economy. There isn’t too much data out this week to get worked up about – we have GDP out on Wednesday and consumer confidence out on Friday.
It wasn’t a great week for the single currency last week with many data releases disappointing. As it stands, the Eurozone is on the precipice of recession. We saw that manufacturing and services for France, Germany and the Eurozone as a whole disappointed. German manufacturing does appear to be on the cusp of contraction which is certainly not good with it being the largest economy in Europe. A bit of a surprise came in the form of investor sentiment for Germany, though, which seems to be quite high at the moment – the predicted number of 0.5% was utterly beaten by the real figure of 11.5%. The week ahead will be a busy one for the Eurozone in terms of data with German IFO business climate and current assessment, German GDP tomorrow, and German unemployment on Thursday. On Friday we’ll see German unemployment and inflation numbers.
Across the pond, things were ok for the US dollar last week as it benefited from a drop in oil prices, risk aversion to emerging economies, positive macroeconomic data and a more hawkish approach from the central bank. There wasn’t too much data out last week to get the dollar hot under the collar, but this week we have GDP numbers out tomorrow, and over 20 data releases out on Wednesday.
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