GBP/USD climbed by over a cent on Friday, and while the pound gained by a much smaller amount against the euro – around two-tenths of a per cent – it nonetheless capped off a positive week for sterling.
Friday saw a sharp US dollar selloff after new evidence of resiliency in the American market. The US economy added 216k new jobs in December, far higher than November’s total of 173k and beating forecasts of around 170k.
That data was tempered by an underwhelming ISM Services PMI. That read fell to 50.6 from last month’s 52.7, indicating contraction within the services sector.
EUR/USD briefly rose by half a cent before moderating to largely unchanged levels. That came after inflation in the eurozone increased to 2.9% in December from the previous 2.4%, a number that reflected the majority of expert forecasts.
The RMT trade union called off a planned strike on the London Underground this week that threatened to put another dampener on economic activity. Major disruption had been expected on the UK capital’s transport network, as drivers and signal workers continue their long-running dispute over working conditions.
The UK labour report for December found there was a softer decline in recruitment activity and the rate of pay growth picked up from lows seen in November.
This morning, economists heard that Germany’s trade surplus widened to €20.4 billion in November 2023, surpassing market expectations of €17.9 bn and up from €17.7 bn in November. This marks the largest trade surplus since January 2021 as exports grew more than imports.
Israel and Hezbollah traded barbs to end the week, as fears grew that the paramilitary group could lash out in response to recent events.
Do be sure to keep an eye out for our Quarterly Forecast, which breaks down a huge year for global currency markets.
Here’s what to look out for this week…
The week begins with eurozone retail sales and a speech from the Federal Reserve’s typically hawkish Raphael Bostic.
Eurozone unemployment then follows on Tuesday before an unusually sparse mid-week lull.
The pace then picks up on Thursday with US core and headline inflation, along with initial jobless claims.
UK GDP will be the focus on Friday morning before attention shifts to a handful of European inflation reads and US PPI for December.
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