Sterling pulled back some of its losses after data showed growth in Britain's dominant services sector hit a three-month high in March. This eased some fears over the health of the economy after the UK’s manufacturing and construction surveys showed growth slowing.
The Pound, which had lost over 1% of its value against the Dollar since Monday, bounced back after the Purchasing Managers' Index (PMI) and rose to highs of just under the 1.2500 level during afternoon trade in London. That left it up almost half a percent on the day but down around 0.6% on the week.
Though the services PMI came in stronger than expected, hitting 55.0, up from 53.3 in February and beating all forecasts in a Reuters poll, taken together with the manufacturing and construction surveys, the data suggested Britain's economy has probably cooled from its strong growth of late 2016.
The US Dollar moved away from its multi-week highs yesterday, as minutes of the latest Federal Reserve meeting suggested the outlook for interest rates had not changed from what the Fed indicated last month after its rate hike decision. Traders also said there was a bit of profit-taking in the Dollar towards the end of the session, and this was mainly within the Dollar versus the Yen. Further, a break of support at 111 Yen allowed a free-fall to 100.70 Yen.
The market seemed a bit surprised by the Fed’s comments that reducing the balance sheet this year would be warranted. Overall, those remarks were viewed as negative for the Dollar, and weakened it against a basket of major currencies.
The Eurozone March PMI services-sector index was revised down to 56.0 from the flash reading of 56.5; the overall reading was still the strongest for nearly six years and there was a further upward pressure on prices. German Bundesbank Head Jens Weidmann stated that the time to reduce bond purchases was drawing closer and that he would like purchases to stop within a year. The comments provided some support for the Euro which lost out to the Pound’s advance on the day.
Data to Watch: 8:15am SWI EUR Consumer Price Index (MoM) (Mar), CPI (YoY) (Mar). 12:30pm EUR ECB Monetary Policy Meeting Accounts. 1:30pm USD Initial Jobless Claims (Mar 31). 9:00pm EUR ECB President Draghi’s Speech. N/A USD Trump-Xi Jinping Meeting
Posted in Daily Market News on Apr 6 2017
GBP Sterling moved to a slightly weaker note yesterday and was kept under pressure by uncertainty over the terms of Brexit, though some analysts said the currency was becoming less sensitive to domestic political developments.VIEW FULL ARTICLE
Posted in Daily Market News on Apr 5 2017 by William Kemp and the Sales Team