Weekly update and forecast

GBP didn’t end the week as well as it’s been performing of late as we saw a stronger dollar dominate, and the pound even lose a little ground to the euro. Low inflation caused by low oil prices is also having a depressive effect, but, we did see Governor Carney make mention of the how growth forecasts for autumn would be revised up from 2.3% this year to 2.4% next year.

Things might be a bit more interesting this week as we’ll see a healthy dose of macroeconomic data released. This includes bank stress test data tomorrow, but also the Financial Stability Report which is of a good deal of importance. Throughout the week we’ll also see Manufacturing, Construction and Services data releasedas well.

The euro struggled too in not being able to gain any real foothold –although it resisted being dominated by it counterparts. German manufacturing PMI came in above forecasts at 56.2 instead of 52.2. Business climate data was also good at 109.0 instead of 108.3 predicted. Deflation is still a problem though –one solution being hinted at is an increase and prolonging of the eurozone’s QE programme.

This week we can expect the euro to be pretty sensitive to any talk about furthering QE – which should hopefully see clarification about on Thursday at the ECB’s presser. There won’t be much else of critical importance this week so EUR will be influenced by events elsewhere in all likelihood.

With the US quiet last week leading up to, and following, the Thanksgiving holiday, the dollar still seemed to maintain strength with the market now pricing in a rate hike on 16 December. Prelim quarterly GDP data was seen to come in at 2.1% instead of the 2.0% predicted, but consumer confidence (CB) fell to 90.4 from previous estimates of 99.3 and 99.1. Unemployment, though, dropped to 260,000 from 271,000.

There will be more employment data out this week, including non-farm payroll data on Friday, while there will also be ISM manufacturing numbers out tomorrow and non-manufacturing numbers on Thursday.