2016 enters final month

As we head towards the start of December on Thursday, we have a fairly busy week of data ahead to test current exchange rate levels. For the Eurozone, inflation on Wednesday and unemployment on Thursday, and in the States Q3 GDP and the key monthly non-farm payrolls data, will be important for the values of their respective currencies. At home, mortgage approvals (Tuesday) and consumer confidence (Wednesday) will likewise influence the Pound.

Last week ended with the UK’s preliminary estimate for Q3 GDP, which came in as expected at 0.5% for the 3 months to the end of September. The figure will be revised in the coming weeks, but was something of a relief to markets given the number of different growth forecasts and adjustments currently populating the headlines. At least the government has some economic growth to work with as it tries to balance the books and adjusts our expectations as to what economic growth and public finances might look like through the Brexit process next year. Chancellor Hammond’s autumn statement seemed to be relatively well received on that subject. The GDP figure was helped by stronger exports (due to a weaker Pound), and increased consumer spending.

The upshot of all this is that levels for buying both Euros and US dollars, as well as many other currencies, are around their best levels for a couple of months. Sterling-Euro in particular seems to have found a ceiling at its current levels, with the underlying ongoing Brexit uncertainty seeming to supress any further gains, therefore placing the risk to the downside and as a result many of our clients with GBP-EUR requirements for the next few months have been taking advantage of fixing their exchange rate in advance with a Forward Contract. Stories are emerging this morning of further legal complications around Britain leaving the EEA and EU, so there could be still plenty more twists and turns before we have a clear idea of what the process next year will look like.

This week’s main economic data releases are as follows:

Monday

1400 – ECB President Draghi speech

Tuesday

0745 – French GDP

0930 – UK mortgage approvals

1300 – German inflation

1330 – US GDP

1500 – US consumer confidence

Wednesday

Overnight – UK consumer confidence

0855 – German unemployment

1000 – Eurozone inflation

1030 – UK financial stability report

1330 – US personal expenditure

1330 – Canadian GDP

Thursday

0815 – Swiss retail sales

1000 – Eurozone unemployment

1500 – US manufacturing

Friday

1000 – Eurozone producer inflation

1330 – US non-farm payrolls

1330 – Canadian unemployment