Fed Decision Stands Alone as Inflation Data Delayed.
Summary:
Fed Flying Blind: The Federal Reserve delivers its final policy decision of 2025 on Wednesday. Crucially, the release of November’s CPI inflation report has been delayed until next week (December 18), forcing the Fed to issue guidance without the latest price data.
Sterling’s Growth Check: The Pound faces a key test this week. S&P Global highlights the release of October’s monthly GDP figures as a primary focus, providing a final health check on the UK economy before the Bank of England meets next week.
German Industrial Recession: The week opens with German Industrial Production data on Monday. Markets are scanning for any signs that the manufacturing slump has bottomed out; another negative print would deepen the divergence between the Eurozone and the US.
The FX markets enter the week with a singular focus on the Federal Reserve’s interest rate decision on Wednesday. This meeting is unique because the standard schedule has been disrupted: the release of the US Consumer Price Index (CPI) for November has been pushed back to December 18. This anomaly leaves investors and the Fed itself in a precarious position, navigating a pivotal policy shift without the immediate context of the latest inflation figures.
Sterling is trading in a holding pattern ahead of the Bank of England’s own decision next week. However, the currency faces a significant hurdle with the release of the monthly GDP estimate for October. After a flat Q3, investors are looking for evidence of a Q4 rebound. A disappointing reading here would undermine the "higher for longer" narrative, potentially empowering the dovish camp within the MPC to push for an earlier cut.
The US Dollar is likely to see heightened volatility on Wednesday. Without the anchor of a pre-meeting CPI release, the market’s entire focus will shift to the "Dot Plot" (the Summary of Economic Projections). If the Fed cuts rates as expected but signals a shallower easing path for 2026 than the bond market is pricing, the Dollar could see a sharp upward repricing, catching bears offside in the final weeks of the year.
The Euro remains under pressure from the region's structural weakness. Monday’s German Industrial Production release is the critical data point for the single currency this week. The market is looking for stabilisation; continued contraction in Europe’s industrial heartland would further widen the growth divergence with the US, leaving the Euro vulnerable even if the Fed delivers a dovish message.
Events to Watch This Week:
Monday, December 8: German Industrial Production (October)
Wednesday, December 10: Federal Reserve Interest Rate Decision & Economic Projections
Friday, December 12: UK Monthly GDP (October)
This week is defined by the information gap. For those managing currency risk, the danger lies in the disconnect between the Fed's action on Wednesday and the missing inflation data. This void increases the importance of Chair Powell's forward guidance, as the market attempts to infer the 2026 policy path without the usual statistical roadmap.
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