Key Headlines:

• Wage Growth Beats Expectations: Wage data came in stronger than anticipated, adding optimism to the economic outlook.
• CAD Weakens Amid Political Uncertainty: Ongoing political instability in Canada has put pressure on the Canadian dollar, causing it to struggle against its peers.

Recap

The GBP finished the day stronger, supported by rising gilt yields, despite earlier concerns surrounding UK data. UK PMI figures were mixed, as manufacturing disappointed while the services sector slightly exceeded expectations. A similar trend emerged in both the EU and US, where services outperformed. However, US PMI figures stood out, significantly surpassing those of the UK and EU, highlighting the continued strength of the US economy.

Today’s Rates

Today's Interbank Rates at 09:52 am against GBP movement.

GBP>EUR – 1.2104

GBP>USD – 1.2695

EUR>GBP – 0.8267

EUR>USD – 1.0488

GBP>CAD – 1.8117

GBP>AUD – 2.0003

GBP>SEK – 13.873

GBP>AED – 4.6594

GBP>HKD – 9.8570

GBP>ZAR – 22.847

GBP>CHF – 1.1384

GBP>PLN – 5.1547

Today’s Key Takeaways

• UK Job Numbers: The unemployment rate held steady at 4.3% for the three months into October, but higher-than-expected wage growth is a concern for the Bank of England. Markets now price in only a 50% chance of a third BoE rate cut in 2025.
• GBP Outlook: Rising two-year gilt yields and continued GBP gains reflect market reactions. However, risks of stagflation in 2025 remain, and any GBP spikes could present hedging opportunities.
• Key Data Tomorrow: UK CPI inflation figures will be in focus.
•  European ZEW Survey: Today’s release will provide insight into economic sentiment for December and whether it aligns with the market’s increasingly pessimistic view of the Eurozone economy.
• US Retail Sales: Afternoon data will indicate whether the US economy remains resilient. Strong numbers would reinforce the current robust outlook for the US.
• Canada Inflation & Political Risks: Canada’s inflation report for November is key after the Bank of Canada signalled a cautious stance on future rate cuts. A downside surprise could weigh on CAD. Additionally, Canadian political uncertainty—following the resignation of the Deputy PM and Minister of Finance—adds further pressure on CAD, with GBPCAD near 2024 highs.

17th December 2024

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