A new week and a new month see the pound in a commanding position against the euro, and fighting back strongly against the US dollar. GBP/EUR is 1.5% better than this time last month.
Black Friday sales were reportedly 12% up on 2023 and 16% up on 2022, as retailers relished the unofficial start of the Christmas shopping season being on a pay-day weekend.
The Bank of England will be taking note of the spending spree, but homeowners seeing the disappearing chance of another interest rate cut in December will be comforted by a monthly house price rise of 1.2% in November, according to the Nationwide Building Society. This was considerably more than expected and the sharpest monthly rise for two years.
Data-wise, there were no real surprises at the end of last week, and little to brighten up the downcast mood around European businesses contemplating potential US sanctions. Various measures of consumer confidence in the bloc were lower, including retail sales falling sharply in Germany and Spain.
Inflation in the eurozone rose to 2.3%, supporting the single currency as it reduces the possibility of a 50-basis point interest rate cut from the European Central Bank (ECB) this month.
There was a bullish response to Trump’s sanctions threat from Europe’s new industry chief and Commission vice president Stephane Sejourne. He told the Financial Times that Europe could become “a collateral victim of a global trade war” and said Europe must adopt a “Europe First” strategy to avoid being flooded by cheap Chinese goods.
Data from the USA was few and far between over the Thanksgiving period, but prior to that was broadly positive, including quarterly GDP an annualised 2.8%.
Of the G7 countries, the UK and Germany have been in sixth and seventh place respectively for growth since the pandemic. Sir Keir Starmer aims to tackle that this week with his “Plan for Change”, which he will say is “the most ambitious delivery plan in a generation”. The plan will be unveiled on Thursday.
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