Pound Sterling ebbed further in the final session of a tumultuous year, leaving it trailing behind a majority of major currencies for 2022 while the U.S. Dollar and the Swiss Franc both remained top dogs for the period.
Sterling was holding intraday gains over the Dollar, Swiss Franc, Dollar-bloc currencies and South African Rand on Friday but continued to carry steep losses for the year against all but four currencies in the G20 grouping with only the Turkish Lira, Swedish Krona, and Japanese Yen faring worse.
Many factors have driven the Pound lower this year, but it had been an outperformer among major currencies until shortly after the Russian military first crossed into Ukraine on February 24.
Since then, symptoms of the war in Ukraine had added further to the losses sustained by the Pound including rising inflation, a deepening trade deficit, and a widening current account deficit.
In terms of data for the first week of 2023, there is a lot to cram in! Tuesday kicks things off with UK Manufacturing PMI for December, with the market widely expecting to see little change from November’s figure of 44.7. This is frustrating news for the UK’s beleaguered manufacturing sector, with little sign of changing while inflation remains high.
Wednesday sees the ISM Manufacturing PMI and JOLTs Jobs Opening figures being released state side, along with the FOMC Meeting Minutes. These minutes are likely to steal the limelight as traders analyse them for hints of future monetary policy action.
We return to the UK on Thursday for the all important Services PMI release, widely expected to come in flat at 50.0. This is followed by Friday’s UK Construction PMI.
Finally, Eurozone year-on-year inflation figures on Friday should come in just sub 10% at 9.7%. This is a 0.4% reduction on the previous figure, however given how high the number remains, we doubt markets will react in anyway other than negatively.
