This morning Sterling continues to move south as the UK Service Sector has declined at a record pace in November, showing some of the weakest figures since the series began in July 1996. Further evidence, as if it was needed, of depth of the UK's economic decline. As a result Sterling is now trading at around 1.47 against the Dollar & below 1.1650 against the Euro.
There was further evidence from the Eurozone this morning to support an aggressive cut by the ECB tomorrow as Eurozone Retail sales for November fall more than expected showing weak consumer demand due to an uncertain economic outlook.
Ahead of the US nonfarm payroll figures on Friday, todays labour market data will be seen as a guide to Fridays figures. However any reports showing a significantly greater than expected decline could get the market worried about Fridays announcement & put pressure on the Dollar.
The talk in the markets now concerns the interest rate decisions to be announced tomorrow, our economists are estimating that the BoE will cut rates by 1% & the ECB will by 0.75%. However given the severity of the economic decline indicated by recent data releases, is there a possibility for larger cuts?
Hazel Wilkinson |Treasury Solutions | nabCapital