Today's data releases
 Key levels
10:00Eurozone Consumer Price Index SupportResistance
10:00Eurozone Producer Price IndexGBP/USD1.33021.3657
13:30US Non-farm payrollsGBP/EUR1.11251.1482
15:00US ISM Non-manufacturing   
Market overview

Yesterday saw the release of the UK PMI services data. PMI picked up to 54.2 in December from 53.8 in November (consensus 54.0, Investec 53.8). Meanwhile, the composite PMI came in at 54.9 from a downward-revised November reading of 54.8, as the stronger services PMI print managed to offset the sharp decline in the manufacturing PMI on Tuesday. Still, there were a number of points of concern within the services PMI, new orders rose at the weakest pace since August 2016, employment growth slowed to a nine-month low and input cost inflation picked up to its highest level in three months. Survey compilers IHS Markit reported that the survey included responses both before and after the EU determined that “sufficient progress” had been made in Brexit negotiations to move onto talks over a transitional period and the future trading relationship.

At the same time the BoE lending figures were released, it showed that 65,100 mortgages had been approved for house purchase in November, an improvement on October’s upward-revised 64,900, beating both consensus and Investec expectations for them to recede to 64,000. These are the first figures released since the first rate hike in a decade by the Bank’s MPC in early-November and halted a sequential four-month decline which saw approvals drop to the lowest in over a year in October. Overall mortgage approvals also picked up to 133,100, as more existing homeowners re-mortgaged their properties. Taken together, this resulted in net mortgage lending firming to £3.5bn, from a revised £3.3bn in October. However, net consumer credit was lower-than-expected at £1.4bn and October’s figure was revised down to the same level, corresponding to a 9.1% YoY decline (the sharpest drop since end-2015). The annual growth of consumer credit now stands at 9.1%, down from double-digit rates in the middle of last year.

The Eurozone economy closed out the year with the strongest Composite PMI reading in nearly seven years, driven by accelerating services and manufacturing activity across all major economies. Markit’s final composite PMI data release yesterday rose to 58.1 in December from 57.5 in November and an upward revision from the ‘flash’ estimate of 58.0. It is now at the highest level since February 2011 and significantly above the 50 mark that separates growth from contraction. Based on forward-looking indicators within the PMI release, the momentum is set to continue. The composite new orders index climbed to 58.0 last month, the highest reading since July 2007. This demand helped increase employment, as hiring growth matched a 17-year record high set in November.

Yesterday afternoon US ADP employment data was released showing that private employers added 250,000 jobs in December, marking the biggest monthly increase since March 2017. The forecast had been for a much lower level at 190,000. The ADP figures come ahead of the US Labor Department’s more comprehensive Non-Farm Payrolls report this afternoon, which includes both public and private-sector employment.

The day ahead

This morning Eurozone CPI & PPI data is released at 10am. With inflation still subdued in the Eurozone economy, investors will be keeping a close eye on the release as any number away from consensus could impact expectations over monetary policy for the Eurozone in 2018. Non-Farm payrolls this afternoon are expected to edge back from November’s bumper month of 228,000, to 190,000, this figure would still be very positive for the US economy and could help the Dollar retrace some of the losses suffered this week. 

Thought of the day

Diehard Irn Bru fans have stockpiled their favourite drink as manufacturers AG Barr embark on their sugar reduction programme by changing the secret recipe. The sugar content of the drink will drastically reduce by almost half in a move that reflects one that many companies have also made. This has left many fans unhappy and taking to social media to voice their dismay. It comes as the government implements a levy on sugary drinks which was announced by George Osborne back in 2016. Make sure you are on the front foot with regards to any changes imposed on your business by talking to your Investec dealer today and seeing how we can help manage your exposure to FX risk to mitigate the impact.

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