The pound enjoyed a strong week last time out, ending Friday around two cents up against the US dollar and nearly 1% up against the euro. Sterling is now trading at its highest level since early September, so if you’re looking to take advantage of the shift please do call your trader.
UK chancellor Jeremy Hunt gave his autumn statement in the eye of a media storm, but the contents of his speech did not shake the pound from its upward trajectory. Hunt outlined cuts to business rates and national insurance, along with over a hundred further measures designed to turbocharge growth. The prospect of additional demand-side incentives in the March budget fuelled the belief that the Bank of England (BofE) will be slower to cut rates than other central banks.
The ‘Flash’ reading for Services and Manufacturing PMI in the UK were 50.5 and 46.7 respectively. Both were higher than expected, and services – the more important reading for the health of the UK economy – was back in positive territory for the first time since July.
Data out of the eurozone contributed to an up-and-down week for the euro. In contrast with the UK, German, French and eurozone PMI was still generally well down in the 40s, leading to some weakness in euro trading. The euro did make some gains against the US dollar in a shortened week for the American market.
Thanksgiving didn’t stop the greenback from sliding against the pound and euro, as lower than expected initial jobless claims underscored the economy’s resilience to elevated interest rates.
The Japanese Yen finished the week down against other major currencies, this after the news that inflation was running slightly hotter than expected and manufacturing had declined.
Here’s what to look out for this week…
Tomorrow, we’ll get a peek at German consumer confidence with the Gfk survey. Sentiment in the German business world did improve this month, although by less than was expected.
Next up will be German inflation and US GDP growth on Wednesday, two major temperature checks that have the power to influence trading.
Thursday is chock-full of macro reads, with EU inflation, US personal spending and Chinese manufacturing PMI all on the slate.
The week ends on a quieter note, as the ISM manufacturing PMI arrives from the US.
Throughout the week we’ll get to hear the thoughts of big-hitting policymakers. Federal Reserve chair Jerome Powell speaks on Friday, while Christine Lagarde (today) and BofE governor Andrew Baily (Wednesday) will also make appearances.
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