Last week was a quiet one for the British pound with there being very little data out to guide its strength. The inconsistent data of late has analysts worrying of a possible slowdown, especially leading up to the general election in May next year. We did also see a fall in mortgage lending to the lowest level since January 2014 which may be indicative of the pound’s vulnerability. GDP figures out last week did, however, give a needed boost when the month-on-month number came in as expected (0.7%). With construction and manufacturing numbers expected to come in lower than expected this week, we may then see some selling pressure on the pound. Services PMI is expected to come in with a bit of an improvement. Thursday will see the interest rate decision announced but no change is expected.
The euro had something of a better week last week with German GDP coming in as forecast (1.2%) which is good news considering how other countries in the Commonality seem to be stalling. Unemployment in Germany also dropped unexpectedly (6.75- 6.6%) in October, coming in as expected for year-on-year but dropping slightly month-on-month. On Friday, however, we did see a slowdown in European inflation – while this might have been in line with expectations, inflation in now sitting at 5 year lows which will ramp up the need for stimulus measures. This week’s data will see an interest rate decision and central bank meeting on Thursday, then Gross Domestic Product numbers for the Eurozone on Friday.
Public holidays in the US on Thursday/Friday saw things a bit quiet Stateside, but earlier in the week we did see GDP coming in at 3.9% as opposed to forecasts of 3.3%. On the other hand, house prices, manufacturing and consumer confidence numbers were seen to fall last month, reducing the pressure to raise interest rates in the first quarter of next year. With PMI figures out this week and predicted to disappoint, we’ll also see economic forecasts tomorrow from Janet Yellen, and non-farm employment numbers out on Wednesday which are expected to come in decently. Friday then sees the unemployment rate come out.
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