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Credit cards at the ready for Black Friday
Yesterday, with the US markets closed for Thanksgiving, the euro and pound fought back. Against both the US dollar has lost a third of its post-election gains this week, as the money markets continued to row back on their initial enthusiasm for the return of Donald Trump.
However, overall, an exciting sort of month for exchange rates has ended with the dollar more than 2% stronger against both the GBP and EUR and indeed the dollar index as a whole.
The threat to the euro from France’s political troubles seems to be limited. Following President Macron’s disastrous election in early summer that left him a lame duck, the Barnier government’s make-or-break budget plan looks set to be rejected. Stocks are down and bond yields are up. On the plus side, for French property buyers a budget rejection looks set to head off potential stamp duty rises.
It’s a mixed picture for European inflation, with Germany’s falling but Spain’s rising – we’ll hear the result for the bloc shortly – but there is no mistaking the business gloom in Europe. European Central Bank president Christine Lagarde addressed the question of Trump tariffs yesterday, suggesting that negotiation and buying more US goods could head off trouble. She said: “How do you make America great again if global demand is falling?” Trump may be more wary, after the perception that he was outsmarted by EU commissioner Jean-Claude Juncker during his first term.
Today is Black Friday on the high street and for online retailers, who hope to recoup some of their extra National Insurance costs. However, data yesterday from the British Retail Consortium suggested that consumer confidence has declined. “While there was a very slight improvement in people’s expectations of their personal financial situation, this was offset by declining expectations of the wider economy,” said BRC CEO Helen Dickinson.
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GBP: Pound climbs again
Sterling held its ground yesterday as a quiet week for UK data ended. Over the week the pound has clambered upwards again after a sharp fall against the euro on Monday and gained 0.75% against the US dollar. Later today we’ll hear some mortgage data, but it’s another relatively quiet week ahead.
GBP/USD past year
EUR: Inflation data today
The euro fell against most major currencies yesterday, but at least it has regained some of its losses against the US dollar (although still 2.5% down over the month). German prices fell by 0.2% last month and France’s annual inflation rate has just been revealed as 1.3%, slightly lower than expected. Shortly we’ll get a reading for the eurozone as a whole.
EUR/USD past year
USD: Dollar falls back on Thanksgiving
The dollar was on the backfoot yesterday. USD/EUR has lost a third of its post-election gains but remains more than 2% stronger than the start of November. The markets remain closed for the Thanksgiving celebrations but reopen on Monday with Manufacturing PMI and on Tuesday with JOLTS job openings.
USD/GBP past year
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