This week, all eyes are on the Bank of England’s policy announcement, scheduled for Thursday. While no changes to interest rates are expected, the comments accompanying the decision will be pivotal in shaping market sentiment.
Economic Context: UK Growth and Inflation Trends
Recent data points to mounting challenges for the UK economy:
- Last week’s growth report indicated that the UK risks stagnation as the year draws to a close.
- Inflation remains a key focus, with figures for November expected to come in at 2.7%, exceeding the Bank of England’s benchmark rate.
The pound has faced sustained pressure, dropping 1.5% against the euro and weakening against other major currencies.
Key Events to Watch This Week
- Today: PMI figures for the EU, UK, and US are on the agenda, providing early insights into economic activity across these regions.
- Tuesday: UK employment data will be released alongside Germany’s business survey and ZEW business confidence report. These figures will offer a clearer picture of economic sentiment ahead of the Bank of England’s Thursday announcement. US retail sales and industrial production data will also garner attention later in the day.
- Wednesday: A packed schedule includes UK inflation figures, which are expected to confirm a 2.7% rise for November. Meanwhile, the US Federal Reserve is expected to announce its third successive interest rate cut, with a second consecutive 25-basis-point reduction anticipated.
How This Affects Your Business
With sterling under pressure and significant economic events on the horizon, currency markets are poised for potential volatility. Businesses should prepare for potential fluctuations by reviewing foreign exchange strategies and seeking expert guidance.
At Qumoney, our specialists can help you navigate these challenges and capitalise on market opportunities. Contact us today for tailored advice to support your business goals.