While this week has been very quiet for the UK in terms of economic data output, and the pound being more driven by events in the US and Eurozone, news out yesterday revealed how average household incomes in the UK have been seen to rise to levels last seen before the peak of the financial crises.
Today from the UK we’ll see a bit more data out by way of mortgage approvals and consumer net lending figures, both of which relate to how consumers are spending right now; a broader measure of economic performance. If these numbers come in strong then it could have some sway over the pound’s strength.
In Europe, Sweden took the popular step yesterday of boosting its quantitative easing programme from SEK65billon to SEK200billion, resulting in a rush of Swedish bond buyers. We also saw the euro take a bit of a knock following an anticipated cut to the ECB’s deposit rates which follows on from China’s recent actions – GBP/EUR hit an almost 10 week high of 1.4000 on the back of this, while it hit an almost 12 week low against the dollar.
In terms of data today, we have German unemployment and CPI data; unemployment numbers will provide particular insight into Germany’s economic health.
Following yesterday’s FOMC meeting, we saw no rate rise following weeks of mixed data. There wasn’t any real clear indication of what and when it might occur – so USD was pushed and pulled in both directions as the markets tried to make sense of what was available. An independent research company has put the chance of a rate rise occurring on 16 December at 50%. All we have to see in reality is better data coming out of the US; if not then it’s all speculation.
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