Yesterday provided us with the latest set of jobs data for the UK. Although UK unemployment fell from 3.9% to 3.8% the data showed a slowdown for UK Average Earnings.
However, the unemployment data appeared to provide the pound with a boost and sterling once again touched its highest level to buy euros since the first week of May 2019. Indeed, UK unemployment fell at its fastest rate in 4 years, which is good news for the British economy.
The pound also got a boost from the news that the Brexit party will not be looking to challenge any seats that the Tories currently have. This has increased the chances of the Tories achieving a majority at the election next month and this could in theory allow the Tories to move the Brexit deal forward.
We are still a month away from the polls and a lot could happen in between but for the short term at least, the pound made gains vs a number of major currencies during the early part of this week.
This morning the UK is set to release inflation data which could influence the Bank of England when they meet next week.
Last week, the central bank voted 7-2 in favour of keeping interest rates on hold with two members voting for a rate cut. Therefore, any signs of a further slowing in inflation could see the Bank of England considering an interest rate cut which could cause movement for sterling exchange rates.
On Thursday, we could see one of the biggest economic data announcements of the month when German GDP data is due to be released for the third quarter. The German economy, which is the powerhouse of Europe has been struggling owing to a number of reasons.
The global slowdown could cause the German economy to go into recession for the first time since 2013. Chinese growth has been slowing and this is clearly having a knock-on effect on German GDP and growth. Therefore, if there is a slowdown on Thursday, could this cause further pressure on the euro towards the end of this week?
On Thursday, we also see the release of Eurozone GDP data so Thursday could see a lot of movement for euro exchange rates so make sure you’re well prepared for what could happen to the single currency.
The US dollar has been trading in a fairly tight range so far this week as the markets appear to be waiting to see what is happening with the UK political situation and also Brexit.
The US cut interest rates recently much to the pleasure of the US President Donald Trump who has consistently been calling for a rate cut for months. Later this afternoon the US will release inflation data for October. If inflation shows a fall this could provide further evidence in support of another interest rate cut to come.
Fed Chairman Jerome Powell will also be speaking later today as well as the announcement of the latest US Monthly Budget Statement.
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