A Busy Week of Economic Data Releases

By Matthew Vassallo

Sterling once again saw its brief fight back against the EUR and in particular the USD abruptly halted last week. Chair of the Federal Reserve, Jerome Powell, gave a hawkish address on Friday, with his bullish stance well received amongst investors. The USD continues to be well supported across the board, putting sustained pressure on previous resistance levels it met against the EUR earlier in the week. This trend was mirrored against the Pound, with GBP/USD levels retracting by over a cent during Friday’s trading. This ended GBP’s modest upturn with support for the Pound waning markedly through Thursday evening and continuing until the close of the European trading week on Friday afternoon.

Looking ahead and there’s plenty of economic data, with key releases to keep an eye on over the coming days. Whilst today’s output is muted and likely to be centred on speeches by both BoE and Fed members, this sets us up for some busier days ahead.

On Tuesday we have UK and Eurozone employment data, along with October’s official unemployment rate. This is coupled with the latest Eurozone Gross Domestic Product (GDP) figures, both of which will be closely monitored by investors due to their economic significance and historical ability to impact both the current market conditions and value of GBP/EUR exchange rates. Tomorrow afternoon also has a host of US inflation data, and it will be interesting to see whether the figures help support Fed Chair Jerome Powell’s bullish address last week. Depending on the outcome we could see an immediate shift in USD rates, which were buoyed by his address last week.

Wednesday is another key date for investors, as UK inflation numbers are released. Considering the economic significance these figures have had on investors risk appetite for Sterling over recent months, expect further movement in GBP rates should the figures come out above or below the markets predicated results. The outcome of these releases will also bring into focus the BoE decision to keep UK interest rate son hold during their latest policy meeting in October. If inflation figures show a further decline, their decision will likely be somewhat vindicated. Any spike in inflation will once again heap further pressure on the central bank ahead of their final policy meeting of the year. Eurozone Trade Balance figures and US Retail Sales complete a busy day of economic data releases, with Wednesday likely being the key day this week in this regard for investors.

A quieter day Thursday, in which US employment data will likely take centre stage is followed by another key release on Friday in the form of UK Retail Sales. With last months figures coming in slightly above the markets predicated outcome, any further improvements could help support any prospective Sterling gains as the trading week draws to its close.