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The UK, US and the Eurozone in the week ahead

  • Eurozone Consumer Confidence set to slide amidst resurgence of COVID cases
  • UK Consumer Confidence also set to be eroded
  • Strong US labour market likely to keep Personal Spending upbeat despite prospect of rate hikes


The CBI Industrial Trends Order data for December kicks off the week’s proceedings. There’s been some volatility in this number of late, with supply chain challenges being a contributing factor here. Whilst these may now ebbing, there’s concern that another wave of COVID-induced isolations amongst the workforce could take another toll here. The number is expected to retreat from the all time high of 26 posted in November, but short of an absolute collapse here, there’s unlikely to be much market concern given the external nature of factors in play.


On Tuesday, Germany releases the GfK Consumer Confidence reading for January. The forward-looking aspect of this metric provides some added value, but opinions are divided as to whether there’s enough momentum here to push this back into positive territory after the December reading of -1.6. Pre-pandemic (and post-Eurozone credit crisis) this number was holding steady around the +10 mark so even a marginal month-on-month uptick won’t really change sentiment. What’s more, with speculation mounting that Germany could be faced with further lockdowns in the new year, excepting a truly abnormal outcome, the number seems unlikely to generate much of a market reaction.

Also on Tuesday, the Eurozone Consumer Confidence flash data for December will be released. The ongoing COVID pandemic is weakening sentiment again here, having touched a multi year high of -4 in September before resuming its downward trajectory. With the ECB dialling back stimulus measures in a bid to manage inflation as the economy continues to struggle, this number is widely expected to disappoint. Forecasts suggest November’s -6.8 will deteriorate to around -8, but anything much below that may raise concern that the ECB has acted too quickly.


US Existing Home Sales for November are out on Wednesday. The Fed recently adopted a more hawkish tone over its monetary policy outlook for 2022 so it’s rational to expect that the number of real estate transactions is still going up. Analysts suggest we’ll see around a 5% uptick on the 6.34m transactions recorded in October, but this number remains well above longer term averages. The risk here would be signs of catharsis already kicking in to the property market as the fact three rate hikes are now being called for the new year will almost inevitably lead to some degree of colling of activity here.


Thursday sees a flurry of data drops as markets wind down into the Christmas break. UK GfK Consumer Confidence for December is first up, with the reading set to deteriorate a little from the -14 posted a month ago. The latest COVID variant is definitely taking a toll on the economy and the service sector especially is set to find itself losing out badly over the Christmas period. With so much still unknown about the latest variant, the market may be somewhat insulated form downside risk here. Anything that beats expectations could however provide some much-needed festive cheer.

US Durable Goods Order data for November is also expected. The reading has shown month-on-month contraction in both September and October with labour shortages and supply chain issues weighing. Although the latter is thought to be easing a little, resurgent COVID case numbers in the US are likely to keep staffing situations tight. A modest improvement is expected with month-on-month growth of just over 1% forecast but again given the clear externalities in play here, it would seem that so long as this print is positive then markets are unlikely to have much cause for concern.


Rounding out the week we have US Personal Income and Spending data, again for November. The key balance to watch for here is spending leading the pack, which in turn shows consumer confidence and a willingness to take on debt. Even with the Fed’s hawkish pivot over rate policy for 2022, given the strength of the employment market, demand for consumption has the potential to remain upbeat for some time yet.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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