The pound, euro and US dollar all traded largely flat in a sleepy last session of 2023 last Friday. Minor overnight GBP/USD gains were quickly scrubbed out over the day, while the euro batted away a brief rally for the pound.
The pound ended 2023 almost 6% up against the US dollar and 2% up against the euro. EUR/USD advanced by almost 4% over the year, as European currencies gradually pared back dollar gains from the past few years.
How much of this was down to interest rate expectations and opposed to relative economic strength was hard to say. What we do know, however, is that markets are jostling to be in the best position when the first of those cuts arrive. A Financial Times poll of economists expected the European Central Bank (ECB) and the Federal Reserve to announce cuts in the first half of 2024, but the Bank of England (BoE) may lag.
Bolstered by a frenzied late rally, global stock markets recorded their best year since 2019, as measured by global composite metrics. Recent gains have been driven by rapidly falling inflation and shifting expectations of when central banks would loosen their monetary screws.
Maine became the second US state to issue a court ruling preventing Donald Trump’s name from appearing on the Republican primary ballot. Both rulings are expected to be swiftly batted away by the conservative Supreme Court, although the decision could further stoke partisan flames heading into an election year.
UK house prices fell by 1.8% last year as higher borrowing costs dampened demand for property. Nationwide expects prices to remain flat in 2024, although downside risks could bring a further drop.
Currency markets head into 2024 with trepidation, but also a palpable sense of opportunity. The widely feared recessionary forces have not appeared yet, and investors are sensing a widening pathway to growth. As ever, we’ll be here to help, whichever way markets move.
Here’s what to look out for this week…
The carrousel of macro data restarts this week, beginning today with a handful of manufacturing indexes before the releases start heating up.
Tomorrow brings German and Spanish unemployment while the ISM manufacturing PMI and JOLTs job openings should keep the US side of things busy before the release of FOMC minutes.
French and German inflation then follow on Thursday, as well as initial jobless claims out of the US.
The week ends on a busy slate of data, with the Halifax house price index, eurozone inflation and US non-farm payrolls.
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