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UK GDP disappoints

Daily Currency Update

Yesterday morning it was announced that UK public sector net borrowing hit £22.0bn in November, the highest November total since monthly records began in 1993 and a big jump from £13.9bn last year. Sterling fell shortly after the release from 1.2180 the session high against the US dollar, down to 1.2050 late afternoon. GBP/EUR saw a similar fall from 1.1460 down to 1.1395 over the same time span. The data release seems to only be further iterating the difficult financial situation the UK government faces as we enter 2023.

Another early release from the UK this morning has shown gross domestic product rose just 1.9% year-over-year in the third quarter, a drop of 0.3% on the quarter. This a further indicator that the economy is in a recession, a recession that could be the longest recession in 100 years as warned by the central bank back in November. The news has kept the Sterling on the back foot this morning against both the USD and EUR. Data to monitor later today comes from the US with both final GDP q/q and unemployment claims due for release at 1:30 pm. GDP is due to come in at 2.9% and unemployment claims are forecast to increase by 10K from the previous 211K.

Key Movers

There has been a degree of optimism in the European markets yesterday as we head into the holiday period, with a small improvement in German consumer sentiment on Wednesday. An improvement on the previous and forecast figure was also the third rise in both economic and income expectations, as well as the propensity to buy has recorded gains. U.S. consumer confidence also saw a rebound yesterday, jumping to the highest level in 8-months. The Conference Board’s index increased to 108.3 as inflation eased and gasoline prices dropped. EUR/USD was choppy yesterday but remained within recent ranges, bouncing between 1.0600 and 1.0650. The pair open this morning at the higher end of this range at 1.0640.

Expected Ranges

  • GBP/USD: 1.2050 - 1.2180 ▼
  • GBP/EUR: 1.1330 - 1.1420 ▼
  • GBP/AUD: 1.7840 - 1.8010 ▼
  • EUR/USD: 1.0590 - 1.0690 ▲