GBP Weekly Forecast (Dec. 16 – 20)

Now that the U.K. general elections are over, is sterling set for a relief rally? Or are there other catalysts to look out for?

Markit flash PMIs (Dec. 16, 10:30 am GMT)

• Considered leading indicators of economic performance
• Dec manufacturing PMI to climb to 49.1 to reflect slower contraction
• Nov manufacturing PMI upgraded from 48.3 to 48.9
• Dec services PMI to improve to 49.6 to signal slower contraction
• Nov services PMI revised higher from 48.6 to 49.3

BOE bank stress test results & Financial Stability Report (Dec. 16, 5:00 pm GMT)

• Checks if banks’ stability and liquidity can withstand extreme conditions
• Identifies potential financial system risks, which can guide policy changes
• Impact of latest election results and Brexit developments to be assessed

U.K. jobs figures (Dec. 17, 10:30 am GMT)

• Claimant count change to slow from 33K in Oct to 21.2K in Nov
• Average earnings index to dip from 3.6% to 3.4% in period ending in Oct
• Unemployment rate to tick higher from 3.8% to 3.9%

U.K. CPI (Dec. 18, 10:30 am GMT)

• Headline CPI to stay unchanged at 1.5% in Nov
• Core CPI also to hold steady at 1.7% in Nov
• PPI input prices to post 0.1% uptick after earlier 1.3% slide
• PPI output prices to stay flat after earlier 0.1% dip

BOE monetary policy decision & MPC minutes (Dec. 19, 1:00 pm GMT)

• Interest rates likely to be kept unchanged at 0.75%
• No changes to asset purchases at 435B GBP expected
• Two MPC members expected to vote for a cut, the rest likely to stand pat
• Traders also eager to hear the BOE’s take on the U.K. election results

Technical Snapshot

• Moving averages show that sterling is bullish against all of its major counterparts, particularly the Aussie and the yen.

• Stochastic, however, reveals that GBP/JPY and GBP/USD are already seeing overbought conditions and could be due for dips.

Missed last week’s price action? Check out the GBP Weekly Review for Dec. 9 – 13!