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Last tier one data release for US before Rate Decision next week.

Last tier one data release for US before Rate Decision next week.

For what has been a relatively uneventful week so far for the Pound, yesterday wasn’t much different. Pro-Pound market participants will be quietly reassured that GBP was able to hold onto the gains seen against the US Dollar after what was something of a “Boring Thursday” over a “Super Thursday”.

Something we have all become quite accustomed to now is the Monetary Policy Committee at the Bank of England keeping the interest rate on hold at the record low of 0.5% – “Super Thursday” saw exactly that. The vote itself did not spring any surprises either as only one member, Ian McCafferty, voted in favour of a rate hike which was widely expected.

UK Trade Balance figures missed their target once again. This seems to be happening with such regularity that analysts could be forgiven for completely underestimating Britain’s reliance on domestic demand and the strength of the Pound and rather simply seeing this as a direct contribution from the UK’s gloomy trade outlook. We should point out that this doesn’t necessarily mean that the data is awful, however, the reason for inconsistent or disappointing trade numbers could be attributed to a complete oversight from over-expectant economists.

With no macroeconomic data for Europe and little from the US either, the Dollar regained a little strength against the Euro, retreating from the 1.10 highs reached the day before. Against the Pound, the Greenback traded relatively sideways, with the most notable highlight being a 70bps gain after the Bank of England vote. This gain was quickly relinquished and the pair consolidated at a similar price to the start of the day.

In the US, the number of Americans filing for unemployment benefits rose to a five-month high last week of 282k. However, this probably does not signal a deterioration in the labour market as the underlying trend remained consistent with tightening conditions and seasonal holiday adjustments. Claims have now been below the 300k threshold, normally associated with healthy labour market conditions, for 40 straight weeks – the longest stretch since the early 1970s. As the labour market approaches full employment there is probably little room for further declines. Other data on Thursday showed cheaper crude oil and a strong Dollar keeping imported inflation pressures subdued in November.

Data to watch: 7am German Harmonised Index of Consumer Prices (YoY) (Nov) & Consumer Price Index (YoY) (Nov). 10.15am EUR Long Term Refinancing Operation. 1.30pm US Retail Sales & Producer Price Index.

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