GBP/USD Weekly Forecast – 08 January – 12 January

Events that marked the week:

Tuesday's session was marked by UK Manufacturing PMI figures. The UK manufacturing sector ended 2017 on a positive note. Although December saw rates of expansion in output, new orders and employment slow from November’s highs, growth in all three remained solid and well above long-run trends. The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) posted 56.3 in December, down from November’s 51-month high of 58.2.  The headline PMI has now remained above the 50.0 no-change mark for 17 consecutive months. The average reading over the final quarter of 2017 (57.0) was the best since the second quarter of 2014.

AUD/USD Weekly Forecast – 08 January – 12 January

Events that marked the week:

There were no data releases from Australia on Tuesday, but from China Manufacturing PMI figures were released. The Caixin China General Manufacturing Purchasing Managers’ Index rose to 51.5 in December, the highest since August. Stronger increases in both output and new orders were seen in December compared to the previous month. Growth in input prices eased to a four-month low, while growth in output prices slowed marginally. Stocks of finished goods shrank again in December, and stocks of purchases declined slightly.

EUR/USD Weekly Forecast – 01 January – 05 January

Events that marked the week:

From Eurozone, on Friday, German and Spanish CPI as well as M3 Money Supply figures were released. The inflation rate in Germany as measured by the consumer price index is expected to be 1.7% in December 2017. Compared with November 2017, consumer prices are expected to increase by 0.6%. Based on the results available so far, the Federal Statistical Office (Destatis) also reports that, on an annual average, the inflation rate is expected to stand at 1.8% in 2017.

The estimated Spanish annual inflation of the CPI in December 2017 is 1.2%, according to the advance indicator prepared by the INE. This indicator provides an advance of the CPI which, if confirmed, would imply decrease of five tenths in its annual rate, since in the month of November this variation was 1.7%. This behavior highlights the rise in the prices of fuels (diesel oil and gasoline), lower than that registered in 2016.

The annual growth rate of the broad monetary aggregate M3 stood at 4.9% in November 2017, after 5.0% in October, averaging 5.0% in the three months up to November. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate, including currency in circulation and overnight deposits (M1), decreased to 9.1% in November, from 9.4% in October. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) was less negative at -2.5% in November, from -2.7% in October.

This week markets will be looking at:

Spanish Unemployment Change (Wednesday 9:00)

CPI Flash Estimate (Friday 11:00)

GBP/USD Weekly Forecast – 01 January – 05 January

Events that marked the week:

There were no data releases from the UK during the last week, with focus being on domestic monetary developments. The Bank of England (BoE) announced its first rate hike in more than a decade in November, amid strong inflationary pressures and a low level of unemployment. At the time, it also signaled its intention to gradually tighten its monetary policy over the coming years. Thus, markets have priced another rate hike in for next year, but some believe there could be two interest rate increases in 2018. One key factor for the central bank is Brexit. At the moment, the U.K.'s decision to leave the EU has mainly led to a depreciation of the pound.