Last Friday, the pound came off its 6-month highs on Friday after manufacturing and services data fell more than expected, disappointing the markets. UK Purchasing Managers Index data for services fell to 48.6 whilst manufacturing dipped to 48.3. Anything below 50 represents a contraction which is why the figures were seized upon.

Chris Williamson, chief economist at IHS Markit said that the “weak survey data puts the economy on course for a 0.2% drop in GDP for the fourth quarter, and also pushes the PMI into territory that would normally be associated with the Bank of England adding more stimulus to the economy.”

This Friday sees the next instalment of the TV debates, although this time it will be a seven-way podium debate hosted by the BBC. The main leaders will be looking to avoid any blunders which could see their support fall in the polls. Any change in political sentiment could result in a movement in sterling exchange rates.

UK economic data is particularly light this week with just a few minor releases including consumer confidence data and tomorrow’s BBA mortgage approvals which may give some insight as to the health of the UK property market.

Eurozone Business Growth Under Pressure from Brexit and US China Trade War

The euro continues to face uncertainty from both Brexit and the ongoing US China trade war. EU PMI for the manufacturing and services sector fell lower to 46.6 and 51.5 respectively. Manufacturing was hit hardest with new orders falling to the lowest level in 5 months.

IHS chief business economist Chris Williamson said “Manufacturing remains in its deepest downturn for six years amid growing trade wars. Business remains concerned by trade wars, Brexit and a general slowdown in demand, with heightened uncertainty about the economic and political outlook driving further risk aversion.” The deterioration in the economic outlook could have consequences for the euro going forward.

EU economic data is also light this week with focus moving to Thursday’s consumer confidence numbers and Friday’s Consumer Price Index inflation data as well as unemployment data.

However, there have also been reports from China that “external rumours” surrounding a ‘phase 1’ trade deal are not accurate. There have been some mixed reports including a report from Reuters suggesting a ‘phase 1’ agreement may not be completed until next year.

There is a raft of US economic data releases this week starting tomorrow with house price data, new home sales and consumer confidence ahead of Gross Domestic Product data on Wednesday.

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