Last night we eventually saw Michel Barnier ousted as Prime Minister as he lost the no-confidence vote after his attempt to push through his social security policy came up against huge resistance in the French Parliament. This has left France in political turmoil and now face the potential of having deadlock in parliament, as the earliest Macron can call an election is July, and the next Prime Minister will ultimately face the same backlash as Barnier. The Euro however has escaped largely unpunished off the back of this, simply because the biggest falls were experienced on Monday when the vote was declared.
Bank of England governor has also validated expectations for just four rate-cuts throughout the duration of 2025, allowing GBP to be one of the best performing currencies next year. The Bank of England expect to make one rate-cut per quarter which will ultimately keep rates elevated when compared to The European Central Bank as The UK seem to be pushing a higher for longer narrative.
Moving onto today, at the top of the hour we have Euro Retail Sales for October with both monthly and yearly figures expected to show a significant decline. We know Europe as a whole has been going through tough times recently, both economically and politically which no doubt will have hit consumer sentiment quite hard. Either way, if these retail sales figures do show a decline, it may well put pressure on The European Central Bank to cut interest rates more aggressively as they wanted, in order to provide more disposable income for consumers.
We end the week tomorrow with Non-Farm Payrolls, with forecasts suggesting 200,000 more jobs will have been created compared to last month. This month’s report is hugely critical as The Federal Reserve in The US are looking at this month’s jobs data before making a decision on whether they can pause their interest rate cuts after this month’s cut, or if they need to continue reducing rates moving into The New Year. Essentially, a reading of lower than 200,000 should see The Dollar weaken as it would mean more rate-cuts are required, whereas a reading of 200,000 or higher should bring an upside to The Dollar.
GBP/EUR 1.2072 GBP/USD 1.2711 GBP/AED 4.6700
GBP/AUD 1.9745 GBP/CHF 1.1246 GBP/CAD 1.7875
GBP/NZD 2.1671 EUR/USD 1.0519 GBP/ZAR 22.9837