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The week ahead and the week behind – 28 November

  • François Fillon won the second round of the French primaries with 68.4% of votes\
  • UK GDP data showed continued resilience on Friday
  • The focus this week will be on Friday’s US employment report and the Italian Referendum on Sunday

via Barclays


In the French Republican primaries election on Sunday, François Fillon, who has an ambitious liberal reformist plan that includes contentious stands on social topics, won with a significant margin of 68.4%

With the first round of the presidential elections (23 April) still a long way away, and given that the outcome of these elections has shown that public opinion is very volatile, Barclays Research note “…the concept of [him being] favourite should be taken with a good pinch of salt…”

On Friday in the UK, the second Q3 16 GDP estimate printed unrevised at 0.5% q/q, confirming a more resilient UK economy in the aftermath of the EU referendum

The most striking outcome in the expenditure breakdown, in Barclays Research view, “…was twofold. First, households proved somewhat weaker than we had anticipated; household consumption grew 0.6% q/q (+0.4pp contrib.), versus our expectation of 0.8% q/q. Second, fixed investment grew 1.1% q/q (+0.2pp contrib.), versus our expectation of -0.5% q/q…”

Last Wednesday’s Autumn Statement did little to change our view of only modest GBP appreciation, as the government’s revision of borrowing forecasts was based on overly optimistic growth assumptions, in our view, leaving little fiscal room to support the economy in the future. The initial market response to the Statement was moderately positive for sterling, owing to the better than anticipated numbers on fiscal consolidation

The focus this week will be on Friday’s US November employment report. Meanwhile, in the Euro area, the key focus this week will be on the Italian Referendum on Constitutional Reforms which will be held on Sunday, 4 December

Barclays Research expect “…nonfarm payrolls to increase 175k (Consensus: 180k; Last: 161k) and the unemployment rate decrease to 4.8% (Consensus/ last: 4.9 %)

In the week ahead:

  • In a quiet start to the week, we watch for ECB President Draghi’s speech in Brussels at 14.00
  • In the week ahead, US Q3 GDP and euro area consumer confidence will be the focus on Tuesday. On Wednesday we look to euro area inflation data. Early Thursday morning we get China NBS PMIs and later in the morning we look to UK manufacturing PMI data. The focus of the week is on Friday where we look to the US employment report to further cement expectations of an interest rate hike in the US before year-end. Over the weekend, attention turns to the outcome of the Italian Referendum

Todays’ currency rates:

GBPUSD: 1.2503

GBPEUR: 1.1723

EURUSD: 1.0665

GBPAUD: 1.6704

EURGBP: 0.8530

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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