OUR SUMMARY
The upcoming week is crucial for the GBP, with key data releases scheduled. On Wednesday, the UK will publish CPI figures, with headline inflation expected to rise to 2.1%, driven by higher household energy bills. Should this occur, it would
likely reinforce market expectations that the Bank of England will hold off on interest rate cuts in December. Retail sales data, set for release on Friday, will also provide insight into the health of the UK economy.
From Europe, attention will turn to final CPI numbers for October and Q3 Euro Area Negotiated Wage figures, which will offer clues about the ECB’s potential decision on rate cuts in December—whether a 25bps or 50bps reduction is more likely.
On Friday, PMI readings for November from the UK, EU, and US will be published. While the USD remains favored over the long term, the week ahead may see some consolidation due to a lack of major US data. If the USD weakens temporarily, this could provide an opportunity for hedging against the broader bullish outlook.
In terms of GBPEUR, recent strength has faded, following weaker-than-expected UK GDP figures that raised concerns about the UK economy. Despite some softness in the EUR, these concerns have not yet fully reflected in the GBPEUR pair, suggesting that any negative UK data this week could lead to a
further decline in the pair by week’s end.
