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Last week, the dollar jumped higher following the release of better than expected US jobs data, which showed that employers added 321,000 jobs in November, the most since January 2012. GBP/USD gapped from 1.5695 to 1.5633 and then on to 1.5580.

Meanwhile, GBP/EUR was little changed from Friday’s opening level come Monday, and opened the week in London at 1.2685.   GBP/USD pushed slowly higher throughout the day, trading to a high of 1.5688, despite the lack of any notable UK or US economic data.   The movements came from Dennis Lockhart’s dovish comment that there should be no rush to remove the phrase “considerable time” from the Fed’s statement on the next interest rate rise.   EUR/USD also made steady gains, trading from up over a cent from 1.2250 to 1.2355.

By James Mills at UKForex, an international money transfer service

UK manufacturing and industrial production data printed weaker than expected on Tuesday morning.   Output fell 0.7% in October, the first fall in five months and against expectations for a rise of 0.2%. GBP/USD fell to a low of 1.5630 following the release, but oddly, it didn’t fall further.   The prospect of Chinese stimulus measures also rose following an easing in their inflation rate to a five year low. This weighed on the greenback throughTuesday afternoon.   Wednesday saw oil prices fall to a five-year low, whilst US data showed that there was a surprise jump in oil inventories – this in turn weighed on the dollar and GBP/USD traded to a high of 1.5755.   EUR/USD traded to a high of 1.2495.

With no top tier data from the UK on Thursday, the pound reacted to events further afield. From the States there was yet more good news, with Retail Sales showing better than expected figures. Both the core (0.5% m/m) and overall (0.7% m/m) reading printed higher than forecast. Last month’s readings were revised upwards too, and combined with a slower than expected fall in input prices, it was another good day for the greenback.   Meanwhile the OECD lowered its forecasts for global GDP and called on the ECB to begin quantitative easing in order to steer the economy away from deflation. This pressured the single currency lower and EUR/USD fell to 1.2390. It recovered overnight, following Bernanke’s dovish comments.

GBP/USD held steady on Friday morning as markets awaited the afternoon’s US Producer Price Index data from November.   The euro traded higher following better than expected Industrial Production figures for October –   GBP/EUR fell from 1.27 to 1.2615 while EUR/USD moved from 1.2390 to 1.2450.

Next week could prove to be a volatile week. Tuesday sees the release of UK CPI numbers and a Financial Stability Report by BOE governor Mark Carney plus European ZEW Economic sentiment surveys.   Wednesday is also shaping up to be a key day, as UK employment numbers and BOE Minutes will appear along with US CPI prints and the Fed’s Monetary Policy Statement.   Thursday also has some second-tier figures, with UK Retail sales, US Jobless claims, Market Services PMI and the Philadelphia Fed Manufacturing Survey, while Friday should be relatively quiet.

In our latest podcast we  talk about US jobs, the ECB’s dilemma, a run down of slippery oil and an interesting interview with Itai  Furman.

Download it directly here.