Today's data release
 Key levels
15:00US New Home Sales SupportResistance
15:30US Dallas Fed Manufacturing Activity   GBP/USD



22:30US Minnesota Fed President Kashkari participates in forum   GBP/EUR1.1095


Market overview

The big headlines this weekend lie outside the UK after Germany edged closer to forming a new government as Chancellor Angela Merkel began haggling with the Social Democrats over the terms of a potential partnership. In a speech to members of her own party on Saturday, Merkel said that any coalition partner would have to support a balanced budget and broadly pro-business policies. Reaching out to the Social Democrats, her ally during two of her three terms, the chancellor said: “We did a good job. We worked well together.”

Merkel and SPD head Martin Schulz, her defeated election challenger, are scheduled to meet on Thursday at the invitation of German President Frank-Walter Steinmeier, who is urging party leaders to find a way to avoid new elections. However Merkel isn’t expected to have it all her own way with the SPD after her failed efforts to build a coalition with the Free Democrats and the Greens. Further afield, the S&P ratings agency downgraded South Africa’s sovereign rating (long term foreign currency) to BB sighting further deterioration of South Africa's economic outlook and its public finances.

The South African Rand weakened by more than 2% as a result with GBP/ZAR and USD/ZAR trading at 18.64 and 13.98 respectively. Moody’s have placed their ratings on review for a downgrade, also pointing to weaker growth and fiscal challenges.

The day ahead

Looking ahead to this week, the US Senate is planning a vote on tax reform, although there is no confirmed date as yet. Donald Trump is desperate for a significant win in his first year of Presidency so this will make intriguing viewing not least because it could also provide a further boost to an economy already riding the crest of a wave of a stock market boom printing record returns. Elsewhere, Jerome Powell will be in the hot seat on Tuesday in Washington when his confirmation hearing begins. Most economists expect the event to go smoothly, but senators will get a chance to probe President Donald Trump’s nominee for Fed chair on his views on the economy and deregulation. Outgoing Chair Janet Yellen will address the Joint Economic Committee of Congress on Wednesday.

Back home, the main focus this week will be on the BoE and the release of the Financial Stability Report on Tuesday morning. It seems likely that the Financial Policy Committee will tighten conditions in the unsecured consumer lending market, given a number of broad hints in recent months. Stress test results for the major banks will be released at the same time.

Thought of the day

For anyone who missed the Black Friday sales this weekend; do not worry, there is still time! The Monday following Black Friday is known as "Cyber Monday". The term "Cyber Monday" was created in 2005 by marketing companies to persuade people to shop online. On Cyber Monday last year, consumers blew £1.9bn as retailers went bargain mad on the web. So actually, if you didn’t do any of your shopping this weekend, you may be in a better position to bag a better deal today.

Last week’s UK consumer confidence number hit its lowest level since the Brexit vote. Will this be reflected in the performance of this weekend’s sales or will it help reverse this drop? How will that impact the pound? Regardless of economic data, Sterling could have a busy December with the key EU Summit scheduled in for 14-15th December. Will we finally agree on a divorce bill and move onto trade negotiations? We will soon find out!

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