The pound soared to a four-month high against the US dollar on Friday following the Bank of England’s decision to keep interest rates on hold. The GBP/USD rate dropped slightly at the end of Friday’s session but remains over 1% higher since this time last week.
The UK services PMI rose more than expected to 53.7 in December from 50.9 just a month prior and above expectations of 51. This marks the second consecutive expansion in the British services sector and outperforms contractions seen in European markets.
The British private sector output also rose in December, reaching 51.7 from 50.7 in November and higher than expectations of 50.9. This is believed to be primarily driven by a modern upturn in services output and strong business sentiment.
On the other hand, US factory activity fell to 48.2 in December, the lowest in four months, compared to a previous reading of 49.4 and forecasts of 49.3.
US private sector growth accelerated to a five-month high as it rose to 51.0 in December, from 50.7 in December. This was supported by the sharpest increase in new orders since July.
Federal Reserve Bank of New York president John Williams told CNBC on Friday that the central bank isn’t talking about rate cuts right now and it is premature to be thinking about March 2024 cuts. Expectations for a March cut fell to 65% from 75% following Williams’ comments.
Last week Thames Waters’s parent company saw its credit rating lowered for the second time in six months as Moody’s warned of “materially” increased risks that regulators will block the flow of dividends.
UK house prices are forecast to fall by between 2% and 4% next year, according to Halifax, Britain’s biggest mortgage lender but it expected a part-recovery in the property market as interest rates and mortgage rates ease in 2024.
As we start to wind down for Christmas, remember the markets don’t have time off, so consider calling your account manager to discuss your requirements today at 020 7898 0541.
On Wednesday, we’ll gain insight into German consumer confidence and the latest UK inflation rate, more on that below.
Later in the week, US data comes in hot and heavy, with GDP on Thursday and figures for November core PCE price index, durable goods orders, personal income and personal spending on Friday.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Account Manager on 020 7898 0541 to get started.
