A lack of liquidity will be a key feature of the week as markets begin to wind down towards the Christmas holiday period and New Year. With liquidity low, volatility should therefore be high and the risk of erratic movement will be a lot more likely. Sterling will be vulnerable as the year-end approaches given the dramatic drop in oil prices over 2015 and the risk of deflation in the London housing market growing. We saw this yesterday as GBP/USD and GBP/EUR slowly pushed lower throughout the course of the day.
Yesterday’s economic docket was very light, with only two notable pieces of data released, UK CBI Realised Sales and the Eurozone Consumer Confidence. Eurozone Confidence as expected posted a reading of -6, its best reading since June this year. CBI Realized Sales in the UK registered at a worse than expected 19, as high street growth fails to meet economists’ consensus.
The third and final reading of US GDP is expected to drop slightly to 1.9%. The reading expected will be its worst since June this year. Existing Home Sales is released later this afternoon, where we will gain an insight into the sale of homes throughout the US.