UK: Weekly FX Market Update 16 December 2024

GBP

• So far, the pound has managed to stabilize In December, having lost up to 8 cents against the dollar between September and November.

• All eyes will turn to the Bank of England on Thursday, after a very disappointing GDP decline in October.

• Bloomberg is forecasting a 5% chance of a 0.25% rate cut from the Bank of England. Will the year end on a quiet note, or will seasonality help GBPUSD rise to the challenge?

EUR

• The ECB cut rates by 0.25% last week, with some investors expecting rates to be at 2% by April 2025.

• With the prospect of further rate cuts, and a market very aware of the Trump trade, will EURUSD visit parity soon?

USD

• Yearly US CPI was released as 2.7%, indicating possible stalling US disinflation.

• Will the Fed embark on a shallow easing policy, by cutting rates on Wednesday and then pausing in January?

• Regardless, it seems like the US economy can outperform its peers again. With that in mind, will the US Dollar continue to strengthen also?

Main events for this week:

Mon Dec 16

09:00 EUR Flash Manufacturing & Services PMI

09:30 GBP Flash Manufacturing & Services PMI

14:45 USD Flash Manufacturing & Services PMI

Tue Dec 17

07:00 GBP Average Earnings/Claimant Count Change/Unemployment Rate

09:00 EUR German IFO Business Climate

10:00 EUR German ZEW Economic Sentiment

13:30 CAD CPI

13:30 USD Retail Sales

14:15 USD Industrial Production

Wed Dec 18

07:00 GBP CPI

13:30 USD Building Permits

19:00 USD FOMC Sets Interest Rates/Statement

19:30 USD FOMC Press Conference

Thu Dec 19

05:00 JPY BoJ Sets Interest Rates/Press Conference

12:00 GBP BoE Sets Interest Rates

13:30 USD Final GDP/Unemployment Claims

Fri Dec 20

07:00 GBP Retail Sales

13:30 CAD Retail Sales

13:30 USD Core PCE Price Index

15:00 USD Revised UoM Consumer Sentiment