UK and EU activity to pick up?

Market reports
Thanim Islam
  • USD picks up as markets ease rate cut expectations
  • Growth in focus today
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USD extended its gains following a rebound on Tuesday as data eased rate cut expectations across next year. The number of people filing for jobless claims came in lower at 209,000 versus an expectation of 228,000, and final numbers from the University of Michigan showed that consumer sentiment in November was revised higher to 61.3, and inflation expectations rose to 4.5% (1-year) and 3.2% (5-year). GBPUSD and EURUSD dropped of their recent two-month highs. However, these data points are worth taking with a pinch of salt, given that investors are likely to be taking profit on recent moves ahead of the Thanksgiving holiday break.

Here in the UK, Chancellor Jeremy Hunt revealed some personal and business tax cuts as the Conservative party attempt to change the narrative ahead of elections next year. But, also worth noting that GDP forecasts for 2024 were downgraded to 0.7% from 1.8% projected in March. 2023 growth was upgraded to 0.6% from 0.2%.


Market rates

* Daily move - against G10 rates at 7:30am, 23.11.23

** Indicative rates - interbank rates at 7:30am, 23.11.23

Table (23)-1

Data points

Table (24)-1


  • EUR – ECB Makhlouf, Cipollone, Panetta

Our thoughts

Markets will be thinner today in light of the US market observing Thanksgiving, and thus there is potential for some volatile moves, particularly from the PMI numbers from the UK and Europe. These will be the first estimates of economic activity in November. GBP and EUR were both negative yesterday following flow back into USD, and anything to suggest that activity is deviating much slower than anticipated will likely add to further declines on both currencies. But in light of GDP forecasts being revised higher yesterday in the Autumn statement, there is a chance of an overshoot in business activity for the UK.

Chart of the day

Economic activity in focus today for Europe and UK with the release of November’s PMI numbers. UK activity is expected to come in again at 48.7, suggesting the slowdown is easing and there is an upside surprise expected for Europe from 46.5 to 46.8.

23112023 cotd
Source: Bloomberg Finance L.P.

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