19th December - Weekly FX Update

Top Currency Pairs Monday 19th December 04:00 UTC GBP/USD: 1.22094 (Last Week: 1.22283) EUR/USD: 1.06081 (Last Week: 1.05137) GBP/EUR: 1.14848 (Last Week: 1.16309)

Market News

Pound Sterling The economic calendar is somewhat quiet this week with the Christmas holidays approaching. Last week we saw the Bank of England take the decision to introduce a further 50-basis point rate hike amid the ongoing battle to fight inflation. A series of official figures released outlined a serious downward trend in consumer purchasing power, a worrying revelation at the time of year where an expected surge in consumer activity should occur. Ultimately, rising energy and food prices have made this a tough time for UK households with expendable income being squeezed for British families. This news caused the Pound to fall against both the Euro and the Dollar, with potential for further volatility in the immediate future. Looking at the week ahead, particular interest will be paid to public sector borrowing figures released on Wednesday followed by final data released on the third quarter GDP on Thursday.

Euro Fairly positive news is expected to come from Europe's biggest economy Germany in the form of the IFO business climate index for December this week. The Index which is used to measure the current business climate as well as measure expectations across manufacturing, builders, wholesalers and retailers for the next six months predicts a small improvement. Last weeks PMI data also showed that a decline in German economic activity slowed for a second month in a row, meaning a potential recession could be less severe than previously feared. Apart from economic data coming from Germany, the rest of the Eurozone is due to be quiet after a 50-basis point rate hike was announced last week by the European Central Bank concluding their data releases for 2022.

U.S. Dollar Data releases will be at a minimum this week in the US, however, on Friday the Personal Consumption Expenditures most up to date reading will be released. The PCE is an effective tool used to measure inflation by the Federal reserve showing changes in consumer behaviour. Data released on Friday will no doubt be compared to readings from the CPI by economists to see if there is any correlation between the readings from the PCE and the readings from the last two CPI releases which showed a decline in the rate of inflation. Friday will also see data releases relating to consumer confidence and new home sales which should give an overall perception on how the US economy is fairing in its battle to avoid a lasting recession. In the bigger picture, USD is still in a strong position, but after recent losses the US currency certainly needs a catalyst to continue its dominance.

If you require alternative currency pair updates, please get in touch and we can arrange for a personalised weekly newsletter. For other FX enquiries, or to book a demo, please call us on 020 3908 4662, or email us at info@goxchange.co.uk Disclaimer: This is not investment advice; it is for informational purposes only.