Whats on the horizon for the markets in December?
December is usually a quiet month with the markets slowing down with both Christmas and New Years looming, however this years looking slightly different to the norm.
Over the last 24 hours, we have already seen a 1% swing with GBP/USD climbing after President-Elect Donald Trump warned of imposing 100% tariffs on BRICS nations if they tried to establish a global reserve currency which would potentially rival the greenbank.
Alongside the USD volatility, yesterday, the GBP gained strength against the Euro as political instability in France escalated. With the possibility of a no-confidence vote in the French government, growing concerns over political unrest and rising debt have contributed to increased uncertainty within the Eurozone. As tensions rise, the Euro experienced a sharp decline against its counterparts, recording its biggest daily loss since early November. This drop was triggered by political instability in France, where Prime Minister Michel Barnier’s choice to bypass a parliamentary vote on the budget ignited widespread opposition. The mounting calls for a no-confidence motion against the government have increased uncertainty, causing investors to react negatively. This political turmoil in France has been a key factor behind the Euro’s recent weakness and this could continue in the weeks leading up to Christmas if a vote of no confidence is put in motion.
Aside from the political uncertainty, we have a busy month ahead with regards to market data. This week, the market will closely watch the Non-Farm Payroll data set to be released on Friday. This key indicator will provide insights into the health of the US economy and offer a glimpse into what President-Elect Donald Trump will be inheriting but most importantly, it may give some indication of the Federal Reserve’s interest rate decision on December 18th. Looking further afield into the coming weeks, we also have inflation figures set to be released in the UK on the 18th of December which will impact the BoE’s interest rate decision the following day and could potentially give the GBP further gains if interest rates are held at 4.75% going into the New Year.
