GBP/EUR has come down 0.75 cents from just under 1.17 to 1.1625 at the time of writing, whilst GBP/USD also lost roughly in the region of a cent from just below 1.28 to 1.27.

Some of the gains we saw last week may have been held by the overly hawkish Bank of England statements following its rate decision on Thursday. Although the central bank opted to hold rates steady, three members of the Monetary Policy Committee voted for a 25-basis point hike despite many economists suggesting this was unnecessary.

Suren Thiru, economics director at the chartered accountancy firm ICAEW, went as far as to say the Bank of England was "unnecessarily hawkish", and it was clear that further hikes would only have a negative effect on the economy - which has already seen some poor performance recently.

It follows growth data released earlier last week when we saw the UK economy unexpectedly shrink by more than expected to -0.3% in October, down from 0.2% growth in September.

As we approach the festive season, market data is significantly lighter this week compared to last week. The first major release is not due until Wednesday when the UK's CPI inflation data comes out. Markets suggest that headline and core inflation will drop slightly by 0.2%, with headline inflation forecast at 4.4% and sticker core inflation at 5.5%.

The UK's quarterly growth data will be out on Friday but is expected to fall from last quarter's 0.2% growth in GDP to flatline at 0%. We'll also see the release of the latest Retail Sales data, which is expected to have grown from last month's -0.2% to 0.5%. Although this is more positive than last month, it could still be constituted as a weak December for shopping, with consumers believed to be cutting back on Christmas spending.

EUR

Last week was very positive for the EUR/USD currency pairing. It gained 3 cents from 1.07 to 1.10, representing a complete regain against dollar losses since the end of November.

Because the currency pair has now touched this position a few times over the last few weeks, it is now considered the new resistance level. Resistance levels represent a point that currency pairs have difficulty moving past because supply then begins to outweigh demand.

The single currency has since lost 1 cent against the USD since Friday, in part due to the continued pause on interest rates from the European Central Bank earlier in the week but also from the slight underperformance in the Purchasing Managers Index (PMI) from France, Germany and the EU as a whole.

French flash manufacturing and services PMIs both landed lower than expected at 43.3 and 44.3, respectively, and down from last month's readings. The German flash manufacturing PMI came in as expected at 43.1, and the services PMI was below forecast at 48.4. All the data still points to business activity falling below the key 50 level, which distinguishes growth from contraction.

There are minimal data releases this week, which could mean a flatter week than last in the lead-up to the end of the year. However, the currency market does tend to be less liquid around the festive period, which can increase volatility.