By Nick Harrison
In stark contrast to the UK being the fastest growing economy in the G7 during the first half of 2024, we are now seeing an economy struggling to find any form of growth as we start the New Year. The new Labour government took over an economy in decline and subsequently tried to mend it, hitting business and consumer confidence in the process. The Office Of National Statistics also added fuel to the fire by saying that the economy actually contracted in October, with the Purchasing Manager’s Index saying November wasn’t any better. The headline rate of inflation rose to 2.6% in November and this has now caused a potential pause to the rate cuts we were expecting early this year. The likelihood right now is that inflation will remain stubbornly high throughout 2025 and this will be a cause for concern for the Bank Of England’s Monetary Policy Committee as it is their remit to bring the inflation rate down to its target of 2%.
On top of this rather gloomy start to 2025, we are also on tenterhooks around whether President Elect Donald Trump will impose the trade tariffs he promised during his election campaign. China is the country to look out for here, as if it gets into a tit for tat situation with the US, then we could see a potential trade war that could damage global growth. The UK will be hoping the rather worn out “Special Relationship” with the US is still intact and that Prime Minister Starmer can work positively with Trump as the year rolls out.
Looking at the economic data coming up over the next few days, we see the US ISM Manufacturing figure being released at 3 pm today. This figure is a leading indicator of economic health as it is a survey of around 300 purchasing managers who are asked to rate business conditions such as employment, production prices and new orders.
Any large deviation from the forecasted 48.3 figure could see a market reaction off the back of this.
Next week is dominated by further US data releases, highlighted by next Friday’s Non-Farm Payrolls figure. Monday though, sees the preliminary inflation figure for Germany and this could well be the first major market reaction we see in 2025. The German inflation figure contracted 0.2% last time in November, so investors will be keeping a very keen eye on this as the figure is released throughout the day.
Germany is also under the spotlight as their federal election is due to roll out on February 23rd. Political uncertainty can cause volatility for that countries currency, so with Germany being the biggest economy in the Eurozone, this could be a very interesting outcome.
So, plenty to digest as another year starts. Our Currency Consultants are on hand to talk you through all the above outcomes and how this all affects the cost of your currency exchange.
See below for the up and coming data releases ….
TODAY
US ISM Manufacturing – 3pm
MONDAY
German Preliminary Inflation – All Day
TUESDAY
US ISM Services PMI & Job Openings – 3pm
WEDNESDAY
US ADP Employment Change – 1.15pm
US FOMC Meeting Minutes – 7pm
THURSDAY
US Unemployment Claims – 1.30pm
FRIDAY
US Average Hourly Earnings – 1.30pm
US Non-Farm Payrolls – 1.30pm
US Unemployment Rate – 1.30pm