Things look a little better for the GBP against the USD this morning, however this is in no way related to a strengthening in Sterling. It is the anticipation that the Fed will announce a rate cut of 50 bp this afternoon, with some fearing a more aggressive cut of up to 100 bp off the back of the Mandoff scandal. Along with the US rate announcement later today their inflation figures are out & are expected to register further easing in the US economy.
GBPUSD is currently trading above 1.52, however GBPEUR is still trading around 1.11, thus creating a near 1:1 tourist exchange rate. Not great for those set to enjoy the Ski Season in Europe.
We have already had the release of the UK inflation figures for November, with the compilation of the same having been hindered somewhat by the reduction in VAT. Consensus was for a year on year fall from 4.5% to 3.9%, however the actual fall was not quite as drastic with CPI coming in at 4.1%. It is anticipated that the ONS may find it difficult to compile these figures on time for the December CPI release as a result of the 2.5% fall in VAT, the result of which should show a sharp falls in CPI next month.
Tomorrow sees the release of the bulk of the UK data this week with a emphasis on Employment, where it is expected that the slump in the construction industry will now be evident in the increase to the claimant count figures. The minutes of the BoE December meeting are also out, which will give us a further insight into the recent rate announcement.
Eurozone PMI data for Manufacturing & Services released this morning faired a little better than forecast, as the rate of decline seen in past months & the fall in the capital goods orders was pointing towards the release of weaker figures.
Michael Corcoran | Treasury Solutions | nabCapital