Currency Note

Positive outlook for the pound

By Sharyh Murray-Francis November 28th, 2022

Last week saw the pound move from strength to strength, with sterling ending the week up by more than 2% against the US dollar and close to 2% against the euro. Today sterling sits tight, ready to navigate a moderately quiet week of key data releases from the UK.

With Britain enduring one of the worst cost-of-living crises in several years, and inflation at a 41-year high this year’s Black Friday pointed to a silver lining for UK retailers who hoped Black Friday shopping would boost consumer spending ahead of the festive season.

Researchers predicted that £8.7bn would be spent between the 25th and 28th of November, indicating a rise of 0.8% year on year. Though, when adjusted for inflation which is currently at 11.1%, this represents an uninspiring figure.

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Today is a quiet day for key data releases across the board, however over the course of the coming days, markets will see Germany’s latest inflation rate, GDP data from Canada, eurozone inflation and America’s GDP for this quarter.

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GBP: A quiet week for UK data

A quiet week of key data releases for the pound this week however markets can expect data on the UK’s 30-year treasury Gilt Auction at 10am.

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EUR: Inflation expected to edge down gently

Euro-watchers will be on standby for this week’s eurozone inflation rate. Markets have forecast the rate to edge down gently from 10.6% to 10.3% in Wednesday’s release.

Even if the rate does fall as predicted, eurozone inflation would still be well above the Central Bank’s target of 2.0 percent. This is against a backdrop of already surging energy prices and euro weakness.

Other key releases this week include Germany’s balance of trade on Wednesday and Italy’s unemployment data on Thursday.

USD: dollar braces for a flurry of key data releases this week

This week US markets are poised for a variety of data releases including personal spending, several Fed speeches and ISM manufacturing PMI for November.

At the end of the week, America’s markets will get an insight into the number of new jobs added to the economy with the latest non-farm payrolls data scheduled in at lunchtime.

The last data release revealed that The US economy added 261K jobs in October which was stronger than expected and above market forecasts of 200K. Despite being the weakest reading since December of 2020, figures pointed to a strong albeit slowing labour market. Those figures are expected to ease gently in Friday’s release.

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