Weekly Market Report 20/11

GBP

UK data released this last few days beat market’s expectations, but was overall worrisome, as employment posted the biggest drop in over two years, while retail sales fell yearly basis for the first time since 2013, clearly reflecting concerns over the post-Brexit economic future. On Brexit negotiations, another week went through with no progress. EU authorities don’t believe sufficient progress will be made by December to move to the next phase, while UK PM May hopes the contrary. A final version of UK Q3 GDP will be released this week.

It seems the UK is still in purgatory over brexit negotiations with the markets seemingly poised to react either way at the slight of any news. This is particular important for clients who are sitting on the fence and waiting for a rate that may not come.

EUR

After last weeks Eurozone inflation data release the upturn for the Euro slowed down. The positive run of Eurozone data continued ahead of the weekend, continuing to support a stronger single currency.

Recent news that Angela Merkel has failed to form a collation government; political uncertainty in the past has weakened the currency and that is what we are now seeing with the Euro. There may be calls for a snap election which could cause further weakness.

USD

Last Wednesday saw the US yearly core inflation come in above expected at 1.8% for October after being expected to remain at 1.7%. US retail also came in above expected at 0.2% showing encouraging signs for the US economy. The US economy is heading into 2018 with strong momentum as Goldman Sachs predict four potential rate hikes in 2018. The Greenback rallied on the back of inflation data and reached lows of 1.31 against the Pound.

Week ahead:

Tuesday: ECB’s President Mario Draghi speech (EUR)

Wednesday: FOMC Minutes (USD)

Thursday: ECB Monetary Policy meeting accounts (EUR)

With mounting pressure on German Chancellor Angela Merkel and a potential far right rising in Germany, the coming weeks could prove very volatile as markets look to see how this plays out. If you have an up and coming transfer, then get in touch with one of our traders to discuss your options and the tools available to get the most out of your next transfer.

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