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December 2016

Sterling holds on after BoE and unemployment data

Published: Friday 16 December 2016

  • Sterling holds on after BoE and unemployment data
  • NZ consumer confidence flat ahead of Christmas shopping period
  • Eurozone inflation expected at 0.6% year-on-year 

The Bank of England left the UK base rate on hold when they met yesterday. That was widely expected and the Pound was steady-as-she-goes. This week’s data has showed the UK economic activity continuing at a moderate pace and today’s retail sales data should be of similar ilk but we are expecting slightly poorer Confederation of British Industry (CBI) Industrial trends survey.
 
Nonetheless, we suspect the UK economy will grow slightly more robustly in 2017 than previous forecasts but the BoE will stay its hand as far as rate hikes are concerned, for at least the first half of the year. Sterling has every chance of strengthening but, against the Euro, it has a seven year long trendline to overcome. That is stopping any GBP advance at 1.2050 right now. If that level breaks though, the GBP-EUR rate has a lot of open space to move higher.
 
Also released today will be the Eurozone inflation data. A short term contraction is expected although the annualised figure is likely to be in the 0.6% area. That is largely commodity and energy related, so won’t have too much impact on the ECB’s thinking. Their target, like many central banks, is a 2.0% inflation rate, so there is little chance of any upward rate movement for now. Quite the opposite in fact.
 
The New Zealand Dollar is a little weaker this morning after news overnight that consumer confidence is pretty flat as Kiwis head into the crucial Christmas spending period.
 
Speaking of which, it is only nine sleeps until Christmas and the Halo team, like many other organisations up and down the country, is celebrating Christmas Jumper Day to raise money for Save The Children. I am sure someone here will assault you with our jumper picture but I hope you are getting involved yourself. And if you are one of the lucky ones whose company is shutting down today for the Christmas break, can I wish you a Very Happy Christmas and a prosperous 2017. For everyone who is going to still be around next week, let’s catch up on Monday and we can talk about the others.
 

One Liners

  1. People say money is not the key to happiness, but I always figured if you had enough money, you can have a key made.
  2. There are two rules for success: 1) Don't tell everyone what you know.
  3. I think my ex-wife is Google because it won’t let you finish a question without coming up with fresh suggestions.
  4. Telling an angry woman to calm down is as effective as trying to baptise a cat.
  5. It turns out that sending an RSVP to a wedding invitation with a note that says, “Maybe next time,” is a bad idea.
  6. If you want entertainment, pick an argument with someone who has hiccups.
  7. True friends are the ones where, when you walk into their house, your Wi-Fi connects automatically.
  8. I bet you a grand I could stop gambling whenever I want to. 

 

Today's Major Economic Releases
 

Market BST Data/Event Previous Expected
EUR 10:00 EU: Final Consumer Price Index 0.6% 0.6%
EUR 10:00 EU: Final Core Consumer Price Index 0.8% 0.8%
EUR 10:00 EU: Trade Balance 24.9b 25.2b
GBP 11:00 UK: Confederation of British Industry Industrial Order Expectations -3 -5
CAD 13:30 Canada: Foreign Securities Purchases 11.77b 12.35b
USD 13:30 US: Building Permits 1.26m 1.24m
USD 13:30 US: Housing Starts 1.32m 1.23m
 

 
Christmas and New Year Opening Hours

 
Monday 26th December - Closed Bank Holiday
Tuesday 27th December - Closed Bank Holiday
Wednesday 28th December  8:30 - 17:30
Thursday 29th December 8:30 - 17:30
Friday 30th December 8:30 - 17:30
Monday 2nd January - Closed Bank Holiday
Tuesday 3rd January 8:30 - 20:00
Wednesday 4th January 8:30 - 20:00
Normal Opening Hours Resume

Daily Currency Analysis by David Johnson
 
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