Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Week Ahead Europe – A Big UK Data Drop, ECB Speakers and Eurozone GDP

Published 02/09/2024, 02:46 PM
Updated 03/05/2019, 07:15 AM
  • Will ECB policymakers leave the door open to a March rate cut?
  • UK data eyed amid division at the BoE

Eurozone GDP may leave bloc on the brink of recession

The eurozone appears to have avoided a recession at the end of last year but it may have simply been delayed.

GDP data for the fourth quarter will be released on Wednesday and is expected to show the bloc didn’t grow again in the final months of the year. It will only take a slight miss to leave the euro area at risk of being in recession in the current quarter.

That said, ECB policymakers probably won’t be particularly swayed by whether the eurozone is just in technical recession or not. That it’s happening while inflation is falling – and is expected to fall much further in the coming months – may do though. And we’ll hear from a number of them next week.

EURUSD Daily

EUR/USD-Daily Chart

Source – OANDA

EUR/USD has trended higher for most of the week after a bad start to it and an end to last. It’s run into support around the 61.8% Fibonacci retracement level which should be an interesting test going forward.

Economic Calendar

Can the BoE be convinced to cut rates in May?

The Bank of England may not be ready to cut interest rates yet but we should have a better idea next week just how close they are.

The standout release is naturally the CPI data on Wednesday as the BoE mandate is inflation at 2% – half the level it stood at in December. Inflation is expected to fall over the coming months but a greater decline in January could help the case of cutting rates sooner. Equally, a higher number could be a massive setback and suggest progress has stalled which could see rate expectations pared back again.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The jobs report on Monday is also key, most notably the average earnings component, as this is a major contributor to price pressures. Particularly in the services sector, an area central banks are most concerned about when it comes to getting inflation sustainably back to 2%. Average earnings growth both including and excluding bonuses were above 6% in the three months to December, a level far too high to be consistent with 2% inflation.

GBPUSD Daily

GBP/USD-Daily Chart

Source – OANDA

The pound has rebounded against the dollar this week but that’s occurred after it broke below the neckline of a topping formation between 1.26 and 1.28. GBP/USD retraced back to the 50% Fibonacci retracement level but has failed to break above there so far.

Economic Calendar

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.