ECB interest rate decision the key event this week



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waterman
Written by Dan Waterman
December 9th, 2024
Sterling looking favourable heading into a week where it has more to gain than to lose, IF things go its way..



GBP
The Pound has been consolidating its position of late against most currencies, bouncing back from a tough UK budget. £-€ has seen a trading range of just 1% over the last month and remains poised to hit a fresh 2024 high. 

The more volatile £-$ has moved 3% in the last month, but most importantly has gained in value for 2-consecutive weeks now, after dropping like a stone the previous 7-weeks. 

The UK has nothing noteworthy until Friday's GDP release and so will be moved by events elsewhere and there is more of a chance than not, these events will be Sterling positive overall.  

Therefore, it's potentially a good 'wait-and-see' week ahead for Sterling sellers. Or for those more risk adverse (especially with large exchanges in the pipeline), a fantastic hedging scenario of buying some now at 'good' levels and then seeing how the week pans out for the remainder. 




EUR
So the French Government did collapse last week, but the markets had already priced this in and £-€ barely moved on the result. This is far from the end of hearing about French politics affecting financial markets and this will weigh on the Euro for much of 2025.

The main event this week comes in the form of the ECB interest rate decision. The expectation is for a 25bp cut, but some economists are warning a 50bp cut could arrive. If the later does come to fruition, we will see the € devalued.



USD
The USD has side-stepped versus many currencies the last 2-weeks and lost against the rest (including GBP). After profit-taking occurred at the end of last month, the US was hit with some poor economic data last week.

A slight rise in the unemployment rate followed a substantial hit on services PMI. Election ramifications and tariff talk were cited in the report but a fall to 52.1% from 56% is a huge blow and something the Fed will pay attention to for this months interest rate decision. 



Expected mid-market ranges for December 9th 2024

gbp
GBP
usd
USD

    $1.2725 - $1.2800    


gbp
GBP
eur
EUR

    €1.2025 - €1.2100    

Upcoming Data
Monday 9th December 2024
N/A



Tuesday 10th December 2024
07:00 EU - German inflation



Wednesday 11th December 2024
13:30 US - Core inflation & inflation rate



Thursday 12th December 2024
13:15 EU - ECB interest rate decision
13:30 US - Initial/continuing jobless claims & PPI
13:45 EU - ECB press conference

21:30 US - Fed's balance sheet




Friday 13th December 2024
00:00 UK - Consumer confidence 
07:00 UK - GDP, trade balance & industrial/manufacturing production 
07:00 EU - German trade balance & industrial production
07:45 EU - French inflation
08:00 EU - Spanish inflation
10:00 EU - Euro-Zone industrial production




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