This week in the markets: ECB moves closer to

The pound fell versus the dollar this week in response to weaker than expected services and construction PMI data. Manufacturing data was surprisingly strong on Tuesday and Thursday, but investors refused to bite and GBP/USD fell below the 1.58 level.

The USD was generally strong, despite US non-farm payrolls printing weaker than expected on Friday. The figures showed that 214,000 private sector jobs were created in the US in October, against forecasts for an increase of 256,000. Aside from this the report was strong, with participation rate increasing, so GBP/USD found good support at 1.58.

Meanwhile the euro gapped lower on Thursday in reaction press conference on the ECB monetary policy announcement. The bank left interest rates unchanged but moved a step closer to quantitative easing. President Mario Draghi hinted that the governing council was unanimous on implementing more stimulus if the current measures failed to revive a flagging economy.

By Alex Edwards at UKForex, an international money transfer service

With the eurozone economy having ground to a halt, and inflation running dangerously low, it seems that full-blown QE is moving closer and closer. Next week’s eurozone GDP figures will be pivotal here. It’s becoming clear that should Germany slip into technical recession, the ECB may decide the time has come to pull the trigger and start buying government bonds.

Next week will be a big week for the pound, with both employment and average earnings data due on Wednesday. If average earnings data is still struggling to keep up with the low level of inflation, it’ll be another kick in the teeth for the GBP bulls. The Bank of England inflation report is also due, followed by comments from governor Mark Carney. There isn’t much by way of market moving events due from the US, due to Veteran’s Day on Monday.

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