Central banks and job data take centre stage

Yesterday's currency recap

UK GDP disappointed on Friday, with the economy contracting by 0.1% in October thus worse than the expected growth of 0.1%, resulting in a broadly weaker GBP throughout the course of the day.

Today's GBP rates

What we think

The week starts quietly with euro-area industrial production and Canadian CPI, where downside inflation surprises would be the most market-moving.

Tuesday is the key risk day. UK labour data will set the tone into Thursday’s BoE meeting, with softer wages and employment expected. In Europe, flash PMIs will be watched for signs of manufacturing stabilisation.

In the US, the November jobs report dominates, with weak payroll growth and a higher unemployment rate expected – the unemployment rate will be the main driver for markets.

Wednesday brings UK CPI, which could still challenge expectations for a BoE cut if inflation surprises higher. Germany’s Ifo survey and multiple Fed speakers also keep macro risks elevated.

Thursday is all about central banks. The BoE is expected to cut rates by 25bp, while the ECB should hold policy steady with forecasts in focus. US jobless claims may matter more than CPI as the Fed remains focused on labour-market conditions.

Friday rounds out the week with UK public finances, retail sales and consumer confidence, while US existing home sales should remain subdued.

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