Daily Market Report - 27/11/2015

Sterling fell back towards a seven-month low against the dollar on Thursday, with upbeat UK forecasts and a spending review by the Chancellor the previous day not changing the view that interest rates will not rise any time soon. The pound had initially climbed on Wednesday after George Osborne's "Autumn Statement", in which he eased some spending cuts and dropped an unpopular plan to scrap some benefits for low-earners, as well as announcing a higher growth forecast of 2.4 percent for 2016. 

The euro slipped towards seven-month lows against the US dollar on Thursday on growing talk of aggressive stimulus from the European Central Bank next week, although the slide against the pound was less acute. Euro zone Central Bank officials are considering options such as staggered charges on banks hoarding cash and buying more debt ahead of next week's ECB meeting. 

Euro zone lending expanded in October at its fastest rate in nearly four years, while a broader measure of money circulating grew well ahead of expectations, ECB data showed. Still, banks continue to park around 160 billion euros in overnight deposits with the ECB, as negative rates and extraordinary stimulus have yet to unblock lending channels. Short-term euro zone interest rates fell to record lows as markets braced for an aggressive cut due to an ECB debate about two-tier deposit rates.

In a noteworthy mention, the International Monetary Fund (IMF) is expected to announce on Monday whether it will include the yuan, also known as the Renminbi, in its $280 billion basket of currency reserves, known officially as Special Drawing Rights, or SDR. Its inclusion in the basket would mark a major diplomatic victory for Beijing's campaign to internationalise the currency.

Furthermore, industrial profits - which cover large enterprises in China with annual revenue of more than 20 million yuan (2 million pounds) from their main operations - fell 2.0% in the first 10 months of the year compared with the same period a year earlier, the National Bureau of Statistics (NBS) said on its website on Friday. 

Key Announcements
0930 – GBP: UK GDP (YoY) expected to remain the same as the previous quarter’s reading at 2.3% 
1100- EUR- Eurozone Financial stability review