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5th December - Weekly FX Update

Top Currency Pairs Monday 5th December 04:00 UTC GBP/USD: 1.23413 (Last Week: 1.20476) EUR/USD: 1.05818 (Last Week: 1.03558) GBP/EUR: 1.16627 (Last Week: 1.16337)

Market News

Pound Sterling It was another positive week for the Pound against both the Euro and US Dollar, however with little economic data being released in the UK until December 15th, it remains to be seen whether the trend can continue as the overall picture still looks fairly bleak. It is fair to say that a lot of the Pound’s recent success has come off the back of a weakening Dollar and the Eurozone continuing to suffer from the fallout of the war in Ukraine. Looking ahead, the Bank of England MPC (Marginal propensity to consume) meeting December 15th could help extend the Pounds fortunes if the data released is positive and well received by traders.

Euro Investors will be watching the outcome of comments made by European Central Bank President Christine Lagarde this week, and further announcements made by the ECB in December 15th’s final policy meeting where it's expected that a 50-basis point increase might be applied. This assessment comes after data released last week showed inflation had eased over the course of November, a lot more than was previously forecasted. It is now thought by some policymakers in the Eurozone that inflation has peaked, paving the way for a slowing down of increases after back-to-back 75 basis point hikes in what was a record year for the pace in which rate hikes have been applied.

U.S. Dollar After a stacked week of data releases, the Federal Reserve now enters a quieter period before the final policy meeting of the year takes place. On Friday, we have the US producer price inflation data being released which should give investors an indication on how the central bank will choose to handle the ongoing fight against inflation after a string of large rate hikes this year. The November PPI data is predicted to show a headline figure of 7.2% year over year which was at 8% the previous month. This would represent a cooling down in the rate, a trend which is expected to be replicated with the release of the Core PPI also due out this Friday.

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