DailyFX European Market Wrap: Sterling Continues Move Lower versus Dollar, Euro
The sun may have been shining this week but official UK data has been distinctly gloomy and casting a shadow over UK financial markets.
Ahead next week the latest look at UK unemployment and, perhaps more crucially, average wage data. Wednesday’s release should see UK unemployment remain around its current 40-year low of 4.6% while average wages are unlikely to pick-up from last month’s 2.1%. With inflation at 2.9% and expected to nudge above the 3% level in the next couple of months, UK consumers purchasing power will continue to be eroded, eroding a vital prop for the economy.
Sterling continues to move lower against both the US Dollar and the Euro, helping to stabilise the FTSE100 from slumping oil prices, but the technical set-up in the index looks weak and further losses may be on the cards.
For followers on the US Dollar, next week is packed full of data points and speeches from various Federal Reserve speakers. In addition, the Fed will release its latest Beige Book report on Wednesday looking at the current economic climate, while Fed Chair Janet Yellen testifies before the Senate Banking Panel on Thursday. And on Friday, the latest look at US industrial and manufacturing production, retail sales and the University of Michigan consumer confidence should keep traders glued to their screens.
In the equity space, US banks will release their latest results. With many banks showing annual gains of 40% - 50%, in part in anticipation of higher US interest rates, any profit misses may see banks giving back some of this year’s gains.
--- Written by Nick Cawley, Analyst and Katie Pilbeam, DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.