Friday turned out to be tough for pound ster-ling since the Q3 GDP figures were a terrible disappointment. Expectations had pointed to a minor increase on a quarterly basis but the outcome was a fall which was twice as large as the expected increase.
The coming days may be negative for GBP, but housing and consumer confidence figures will be released and they have shown a positive trend. If these figures continue to be positive, it will reduce the downside for pound sterling. A test of EUR 7.92 (EUR/GBP 0.94) can in no way be ruled out and even seems likely on the basis of Fri-day’s GDP figures.
The outcome of next month’s monetary-policy meeting in MPC on 5 November will no doubt be crucial for the trend. Although the reference to further quan-titative easing from the drop in the last min-utes from MPC, the poor GDP figure sends up the likelihood that we will still see further relaxations.
Since the beginning of October, JPY has been hit by the relatively optimistic sentiment in the financial markets. In the past 14 days the closing price has not been above the opening price, and it has hence been one way traffic.
Therefore, we should see a correction or at least a consolidation in the short term al-though we are in the long term negative about JPY. Therefore, we will (until the correc-tion/consolidation has materialised) stick to our 1M expectations of a slightly stronger JPY.
Today we will not see the release of many important macroeconomic events, the most important being the trade balance from Sweden and consumer confidence from Germany. This week will, however, see the release of GDP figures, house prices and Chicago PMI from the US, consumer prices and unemployment from the euro zone, an important week for Japan with industrial production, monetary-policy meeting, consumer prices and unem-ployment, monetary-policy meeting from Norges Bank and KOF leading indicator from Switzerland.
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