A negative week is expected for Sterling..
| GBP
| £-€ has recovered from its sub-1.13 mid-market slump seen on Friday, but for how much longer?
The UK Budget pressure is building, rumours continue to circulate (no raise in the basic rate of income tax the latest) and the UK data this week poses a problem.
The UK offers inflation, confidence, retail sales & PMI figures this week and all are expected to go lower. The data alone could easily sink GBP by 0.5% this week.
What financial markets and what consumers want to see next week are the complete opposite to each other.
Businesses and consumers have been hunkering down this year and depending on what the outcome at the Budget is next week, it could be more of the same next year and beyond (if tax hikes arrive). But this play 'could' prove GBP positive in the middle-to-long-run.
If so called 'back-door' or 'stealth' taxes arrive, it will result in the same outcome for businesses and consumers, but be GBP negative in all aspects, as it's essentially kicking the can down the road again and it hasn't been working.
Or the Chancellor surprises us all and breaks her self-imposed fiscal rules and everyone lives happily-ever after (maybe)?
EUR Another 'back-seat' week is ahead for the Euro-Zone with only PMI data worth looking at on Friday.
USD It was the usual volatility in the £-$ rate last week (1%+ swing), but current levels reflect the same as this time last week.
US stocks ended up retreating for most of last week which strengthened the USD and we may see similar this week with earnings being reported by huge companies amid concerns of an AI bubble.
November has been stable for the pair, but this and next week should change that narrative with ease.
Please check out the main events of the week below..
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