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Sterling faced down a string of key data reports before the Christmas break.
Sterling enjoyed a promising start to the last significant week of 2024. Positive UK services data, coupled with some less chipper news from the land of European manufacturing, allowed the pound to add half a cent against both the euro and the US dollar.
This morning’s UK unemployment numbers gave the pound an early boost. Joblessness remained unchanged at 4.3% in October, in line with market expectations. GBP/EUR and GBP/USD had each added a third of a cent at the time of writing.
The monolithic German manufacturing sector’s troubles limited any euro momentum that may have emerged on Monday. December’s preliminary numbers pointed to another month of negative growth, although news that services PMI had climbed did at least soften the blow.
According to Make UK, a British manufacturing trade body, manufacturing confidence fell at its sharpest rate since the pandemic following Rachel Reeve’s Autumn budget. After showing signs of improvement, the budget brought sentiment to “a shuddering halt”. Make UK now expects the manufacturing sector to contract by 0.2% in 2024, down from a tiny expansion last year.
China’s retail sales slumped to 3% in November, far below the expected 4.5% growth. There are growing fears that the government’s latest stimulus measures are not doing the trick, although robust industrial production figures suggest otherwise. The Chinese yuan fell slightly after the news broke but recovered its footing over the course of Monday.
The European Union has launched a €10bn space programme intended to rival Elon Musk’s Starlink. The UK will not take part in the scheme, which aims to ensure technological and cyber security against a growing backdrop of threats.
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GBP: Services rise from the canvas
The crucial services sector is a fairly reliable barometer of the pound’s success. After hitting a 13-month low in November, it was no surprise to see the pound get a little bump after S&P Global services data recovered in December. That was just the start of the risks for the pound this week, which include inflation, retail sales figures and the Bank of England’s interest rate meeting.
GBP/USD: the past year
EUR: Seeking direction
This morning’s German Ifo business climate survey should provide a little direction for an increasingly muted euro. With little significant European macro news to navigate before Christmas, the euro’s quest to finish the year strong may be more reliant on the poor performance of its rivals than any local success.
GBP/EUR: the past year
USD: Fed blackout prompts pause
The Federal Reserve’s traditional blackout period before an interest rate decision left the US dollar searching for impetus on Monday. EUR/USD was little moved, while the US dollar slid against the pound. This afternoon’s retail sales release will at least give US markets something to focus on ahead of tomorrow evening.
EUR/USD: the past year
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