Towards the end of the week we saw GBP finish up on an 8 week high against EUR, while versus the US dollar things were a bit more under pressure. We also one of the MPC’s biggest advocates for a rate raise, Ian McCafferty, state that a cut in interest rates could not entirely be ruled out, and it also appears now that further QE is not out of the question in stabilising the UK’s economy. Importantly, we also saw the BoE Governor lend his support to the pro-EU camp, and retail sales were seen to come in strongly for last month which is always a good indicator of economic health.
Tomorrow we’ll see quarterly GDP figures out – forecasted to come in at 0.6% (which is down on the previous 0.7%). Aside from that, it’ll be a quiet week in terms of data from the UK.
Things weren’t looking so up for the euro as we saw German PPI fall to -2.1%, then an announcement from Mario Draghi that QE might need to be revised in the wake of poor fundamental data and deflationary pressures – there might also be other policies put in place, too, such as lowering deposit rates or increasing stimulus overall.
There won’t be anything exciting released this week, data-wise, other than German IFO business data – with Germany being the biggest and most influential economy in the Eurozone, this data may, in all likelihood, have a bearing on how EUR performs.
In the US last week, a lack of significant data didn’t stop USD from making decent gains – hitting the important 1.10 mark against the euro (not seen since August). There was also a lift in the number of building permits issued, which bodes well for future construction activity, and fewer people were seen to file for unemployment insurance.
For this week, we’ll see the FOMC release a statement along with a federal fund decision made. Tomorrow will see the release of core durable goods orders along with consumer confidence data. Later in the week will be quarterly GDP numbers as well as unemployment data.
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