Last week was generally pretty supportive for Sterling exchange rates from a data perspective- however on Friday this all changed very quickly as retail sales numbers came out as low as they were last in the pandemic. These spending numbers have pretty much confirmed that the BoE are finished with their hiking cycle, as clearly the cost of living crisis is still a big issue amongst the UK public- this alongside worse than usual weather has contributed towards less appetite for spending.
Recovery is expected with November sales and Christmas spending, however I do not see anything explosive on the horizon on the spending front as UK consumers are clearly saving and not spending.
This week is not the busiest, but there are a few important releases and speeches that are noteworthy- the first is BoE Governor Baileys speech on Monday evening where we will be looking for any form of forward guidance, this is not guaranteed but given recent data releases then Bailey may reveal something to the markets.
On Tuesday the key release is the FOMC minutes- we know the Fed would have stuck to their messages of rates being “higher for longer”, however the market now sees the Fed cutting rates next year, so I do not think this release will prove to be that volatile at all.
On Wednesday the key release will be the UK Autumn Statement- with next year being an election year in the UK, this particular statement will be important to see what the Government is promising- the rhetoric seems to be around tax and cutting taxation through the next few years (After a tax rise earlier this year)- It is unclear currently what is supposed to be said but Wednesday could be an interesting day (Hoepfully, not as interesting as this time last year!)