Delayed US Growth Data Takes Centre Stage in Holiday Week.
Summary:
Holiday Liquidity Drain: Global order books are thinning rapidly as the week progresses. With US markets closing early on Wednesday and remaining shut on Thursday, the risk of "gappy" price action is elevated.
US GDP Reveal: The fallout from the recent federal shutdown means investors finally receive the initial estimate for Q3 GDP on Tuesday. This release replaces the standard schedule and serves as a critical, albeit delayed, health check on the US economy.
Sterling’s Final Audit: The Pound faces a definitive moment this morning with the release of the final Q3 GDP figures. This data provides the last major domestic input for the Bank of England before the new year.
The final full trading week of 2025 is characterised by a unique combination of thinning liquidity and high-stakes data releases. Typically a quiet period, the schedule this year has been compressed due to the earlier disruption in US government reporting. Investors are therefore navigating a hazardous environment where significant economic updates are landing in a market that lacks the depth to absorb them efficiently. The primary objective for institutional desks is capital preservation, ensuring that 2025 books are closed without exposure to erratic volatility during the holiday crossover.
Sterling begins the week with an immediate focus on the real economy. The Office for National Statistics releases the final estimate for Q3 GDP this morning. While typically a backward-looking release, the market is sensitive to any revisions that contradict the Bank of England’s "soft landing" narrative. Once this data is digested, the Pound is expected to decouple from fundamentals and drift on month-end corporate flows. The lack of further domestic catalysts suggests GBP/USD will largely track the broader moves of the Greenback into the Christmas break.
The US Dollar is bracing for a significant data event on Tuesday. Due to the schedule changes enforced by the federal shutdown, the Bureau of Economic Analysis is releasing the "Initial Estimate" for Q3 GDP just days before Christmas. This is a rare scenario where the market receives its first comprehensive look at quarterly growth this late in the year. A robust print would validate the resilience of the US consumer and likely support the Dollar, whereas a disappointment could trigger a sharp unwind of long positions in an illiquid market.
The Euro enters the holiday period with a sparse economic calendar. The only notable release is the Import Price Index from Germany on Monday, which may offer clues regarding imported inflation pressures. However, the single currency is largely functioning as a passenger to US developments. With European desks staffing down significantly after Tuesday, the Euro is vulnerable to sudden price gaps, particularly if the US GDP data surprises the market during the transition between the London and New York sessions.
Events to Watch This Week:
Monday, December 22: UK Q3 GDP (Final Estimate) and German Import Prices
Tuesday, December 23: US Q3 GDP (Initial Estimate due to delay), US Durable Goods Orders and Michigan Consumer Sentiment
Wednesday, December 24: US Initial Jobless Claims (Rescheduled)
Thursday, December 25: Markets Closed (Christmas Day)
This week requires a defensive posture. The release of a major US growth report on Tuesday, in a market suffering from holiday liquidity conditions, creates a specific risk of slippage. For those managing currency risk, the priority is to execute any remaining 2025 hedges before the US close on Tuesday to avoid the unpredictable pricing environment of Christmas Eve.
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