Euro, Sterling weaken as year draws to close

The euro has started weakening again as we near the end of the year. Despite the Eurozone economy beginning to see the positive impact of the European Central Bank meeting, the German IFO survey showed that the outlook as we go into 2016 is uncertain.
 
The IFO business climate index dropped to 108.7 from 109, and other indicators are showing that growth in the region is frustratingly slow. External factors are also playing a part, as a weaker China and a possible slowing of the US economy following the US Federal Reserve’s tightening this week might contribute to holding the European recovery back.
 
Meanwhile in the UK, Sterling is stubbornly weak despite economic reports showing an improvement in the economy. UK retail sales were very strong and jumped 1.7% in November, which is more than two time stronger than expected – in part thanks to Black Friday discounting.
 
On an annualised basis, retail sales rose 5%. The Confederation of British Industry’s industrial orders also improved in December. Only wage growth and labour market conditions have deteriorated, but in other places the economy is on a strong footing.
 
Looking at today as we go into the weekend, November PPI data in France is due for release. From the US we’ll get the flash December services and composite PMI prints, along with the Kansas City Fed manufacturing activity index reading for December.
 
Have a wonderful weekend.