By Simon Eastman
Sterling finished the week on the front foot against most majors following the upbeat jobs data from the US.
Non-farm payrolls came out much higher than forecast, with an increase of 216,000 new jobs for December, way above the 170,000 expected. This gives the Fed less to worry about with economic recovery and therefore less chance of them looking to increase interest rates any further from the current position. Sterling/euro rose half a cent from an already buoyed position and jumped nearly a cent and a half against the US dollar.
Those with sterling in hand should be wary though and look to take advantage of any such increases in the rates, as markets see the road ahead as rocky for the Bank of England. Recession is still a likelihood and inflation still a real problem as it continues to ride high above the 2 percent target. PMI data has been poor recently too, which gives a key insight into the performance of key areas of the economy like manufacturing and services, which has always been a strong export and money maker for the UK. Strong US data may give a short-term break for sterling, but any guidance from the Fed on interest rates could easily lead to a reversal, with sterling/euro also being affected and any European data which contravenes recent indications from the European Central Bank that they wont raise rates further, could also turn against sterling in the coming weeks as the 2024 data starts flowing.
The week ahead brings little in the way of data for the UK until Friday with plenty coming out over the week concerning the EU and North America. With that in mind, it may be prudent to look at securing your currency early in the week to avoid any upsets as the week draws to a close. The main releases are details below:
Monday
German factory orders and trade balance; Swiss CPI; EU retail sales, consumer confidence and services sentiment.
Tuesday
Aus retail sales; German industrial production; EU unemployment
Wednesday
Aus CPI
Thursday
Aus trade balance; US CPI
Friday
UK trade balance, manufacturing production, industrial production, GDP; US inflation and consumer sentiment index.
A busy end to the week and plenty to upset the sterling apple cart over the rest of the week, so contact one of the team today for some friendly guidance and discuss the various options available for securing your currency.