It was something of a poorer week for the pound as we saw it end the week down against the euro – closing at its weakest weekly level since February this year. There was also poor services PMI data seen at 53.3 (below the 56.4 expected at the start of the week. The BoE were also seen to hold the interest rate at 0.5% - but, while Mark Carney still thinks the UK is underperforming in terms of inflation, the UK’s interest rate situation is not being seen as dependant on what happens in the US. A final blow was a drop for construction output (4.3% in August) – which means it’s now at its lowest level in 3 years.
This week sees a number of important releases out for the UK, including inflation data – expected to remain as it is at 0.0%. There’ll also be BoE monetary policy data on Wednesday and employment data to chew on.
By comparison to the pound, the euro, on the other hand, had a good week despite the region seeing poor releases from powerhaus, Germany, that included a dip in industrial production, and a lull in factory orders, too, which came in at 2.3% lower than anticipated (-1.8%).
In the eurozone this week we’ll see the Greek bailout finalised – each of the struggling country’s four major banks will receive £15Bn – and this should lead to the full reinstatement of banking and credit functionality – a major confidence boost for the troubled country. There will also be more German data out by way of ZEW sentiment – a fundamental indicator of how Europe’s most important economy is doing.
US data was mixed last week with ISM (non-manufacturing) data coming in below expectations, but unemployment figures showing a reduction to 263K from 274K. Following FOMC meeting minutes last week, it also doesn’t appear that the Fed will raise interest rates anytime soon.
This week, we’ll see retail sales and PPI data out of the US which are both expected to come in as previously seen. Towards the end of the week we’ll see CPI and unemployment data as well as Philly Fed numbers. Consumer sentiment data will be see at the end of the week.
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