Are things looking up for Sterling?
We are yet to see GBPUSD sustain a recovery over the 1.4000 mark, but there is promise following a third day of gains for Sterling. ADP employment change heads the data for the US alongside the release of the Fed’s Beige Book, which reports on the current US economic situation, and MBA Mortgage Applications. All of these are likely to impact the demand for the Dollar.
The ADP employment report may have an instant impact on the market, but more importantly it will give some insight into the direction of the all important US Non-Farm Payrolls report on Friday. If the ADP figure prints higher than the estimated 190k we will likely see gains for the Dollar as the market will anticipate a positive labour report on Friday. On the other hand, if the numbers come in lower, we may see Cable break the 1.4000 resistance level.
UK manufacturing PMI printed at a three-year low, slowing down Sterling gains against the Greenback to end the day at 1.3951 yesterday. With little data coming out of the UK today, most of the Pound’s price action will be dictated by US and Eurozone data. UK construction PMI data is out at 9.30am, though this data is seen as the least important for Sterling in comparison to manufacturing and services PMI. However, a corrective rally in Sterling vs USD could gain traction if the construction PMI blows past expectations.
The Eurozone released its unemployment figures yesterday, and the jobless rate for January was posted at 10.3%. This was down from the 10.4% it showed for December. This marks the third consecutive month the figure has fallen, and the lowest figure since August 2011. The manufacturing PMI also came in better than expected for February. However, due to the weakening of core inflation, the better than expected news did not translate into Euro buying as investors seem more concerned about what Draghi will say at next week’s European Central Bank meeting.
GBP/EUR continued on its recent upward trend, with the pair opening at 1.2800 and hit is daily high of 1.2891. The single currency did claw back some of those losses and opened this morning at 1.2836. There was little volatility yesterday against the Dollar, with EURUSD opening at 1.08728 and the pair traded sideways for much of the day. It opened this morning at 1.08678, down just 0.5% from the previous days open.