The Weekly Market Update
News & Insights
w/c 15th December: Policy Week Ahead
GBP
The British Pound remains under pressure after UK GDP showed the economy contracted by 0.1% ahead of the Budget. Markets are now focused on Thursday’s Bank of England meeting, where a rate cut is widely expected. Ahead of that, UK labour market data and PMI figures on Tuesday, followed by inflation data on Wednesday, will be key. Any further signs of economic weakness could increase expectations of additional easing next year and weigh on the Pound.
EUR
The Euro has outperformed over the past week and begins Monday in a relatively strong position. The European Central Bank is expected to keep policy unchanged later this week, with inflation close to target and the economy proving more resilient than feared. PMI data on Tuesday will be watched closely for signs of momentum. If the ECB maintains a confident tone on Thursday, the Euro could remain well supported against both Sterling and the Dollar.
USD
The U.S. Dollar is slightly firmer at the start of the week but remains sensitive to expectations around further policy easing. Attention turns to a busy US data calendar, including PMI surveys and retail sales on Tuesday, non-farm payrolls midweek, and inflation figures on Thursday. These releases will be closely watched for confirmation that the labour market is cooling. Any disappointment could renew pressure on the Dollar despite last week’s modest rebound.
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