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Yesterday sterling gained against the US dollar and lost against the euro. While that ultimately ended in little change overall over the week, GBP/EUR remains close to a three-month high.
There was a large loss against the Japanese yen, but no more than any other currency, as JPY made gains of 3% to 4% against its major pairs. The reason for the yen’s strength is the fact that the Bank of Japan looks set to raise interest rates just as the US Federal Reserve in particular is about to lower them.
There was plenty of data to keep the markets interested yesterday. On the European side, eurozone GDP fell in the third quarter by 0.1%, leaving it flatlining across the year. Germany’s industrial production fell by 0.4% in the month, when growth had been expected.
In the UK, house prices were revealed by the Halifax to have grown by 0.5% in the past month, cutting the annual decline to around 1%.
There was little movement for the dollar, as the markets await November’s Non-Farm Payrolls reading, out today at 1.30pm UK time.
On British high streets, the British Retail Consortium (BRC) noted a rise in the use of cash, as opposed to debit and credit cards. Cash was used in 19% of transactions last year, compared to 15% the previous year. Also bouncing back from the pandemic, the Nationwide Building Society has told all staff that they must be in the office for 40% of their working time (two days per week). This might have been noticed less had the Nationwide not previously championed a “Work from Anywhere” policy just two years ago.
A reminder that next week is a big one for data, and with interest rate decisions too, so if you are currently exposed to currency risk, make sure you are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Trader on 020 3918 7255 to get started.
GBP: Sterling treads high water as big week awaits
The pound weakened marginally against most currencies yesterday and majorly against the Japanese yen.
There was little to excite the markets, and while the governor of the Bank of England Andrew Bailey did speak, it was mainly to warn against the risks of artificial intelligence (AI).
However, matters liven up considerably next week, with potentially market-moving data all week and an interest rate decision on Thursday.
GBP/USD past year
EUR: German inflation falls further
The single currency had a broadly positive day, while also losing heavily to a stronger yen.
Germany’s inflation rate has just been confirmed for November at -0.4%, adding up to an annualised 3.2%.
Next week the big data releases start on Tuesday with the ZEW Economic Sentiment Index, both for the Germany and the eurozone.
USD: Markets await potentially pivotal data
The dollar fell against most other currencies, but apart from against the yen it has been a somewhat tepid week.
Will that change today with Non-Farm Payrolls? Not much is expected – around 180,000 new jobs – but we have been surprised before.
There will also be a preliminary reading for Michigan Consumer Sentiment.
Next week the big data guns will be firing, as a prelude to the Fed’s interest rate decision on Wednesday. Watch out for the US inflation reading on Tuesday.
