With debt expected to reach £900bn (70% of GDP) in the coming years, the cuts are expected to be severe. This week then, in addition to the usual releases below, it’s the spending review announcement that will likely dominate the currency markets.
We expect the usual media leeks well before the official announcement on Wednesday, so we could see volatile swings in rates at any point. We also have the BoE minutes, so we’re in for some uncertain times, and it’s going to be pivotal for the Pound.
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The only UK data was yesterday evening when the Rightmove house prices were released, that showed . Today, the main data is from the US where we see the monthly Industrial Production figures. The dollar is weak at the moment, so a poor result (less than 0.2%) will push GBP/USD rates higher.
From the EU today, we have EU Construction Output along with German Economic Sentiment. From Canada, there is an Interest Rate decision. With world banks currently trying to keep currencies weak to help exports, we expect rates to stay at a 1% low.
Today’s the big day. The Spending Review is announced by the Chancellor revealing where the axe will fall. Along with the minutes to the recent Bank of England Interest Rate decision, today is very significant for the currency markets. The spending review could surprise the markets, and the BoE minutes will show who voted for a rate hike and also the discussions regards Quantitative Easing (QE). It’s the rumoured QE that has pushed Sterling down of late, so the markets will be paying very close attention to this. German Producer Prices may also play a part in GBP/EUR movements today.
We have Purchasing Managers Index (PMI) today from Germany and Europe. This captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Also from the EU, Consumer Confidence measures are released. For the UK, Retail Sales and Mortgage Approvals are the figures to look out for. Jobless data from the States rounds off the day.
German Business Climate and Current Assessment is released today. It could move GBP/EUR rates. From Canada, Consumer Prices will show how inflation is faring, despite interest rates being low.
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