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GBP may be on back foot today

GBP may be on back foot today

As Bob Crow and his cronies try to bring London to a standstill over the next couple of days, there’s lots of news out for the markets to react to.

Today should be interesting for EURGBP, as we will have a battle between the British and the EMU reports, as every PMI number will be important for building market expectations. The region that proves to be the strongest by index will define the future of the pair   Today’s releases of non-manufacturing confidence will complete the picture of overall business sentiment in January. It is widely forecast that Eurozone final services PMI to be unchanged and UK services PMI is likely to be better than expected which should provide further support to GBP after yesterday’s stronger-than-expected construction PMI.

Although the construction sector is not a big deal in the scope of the British economy, the pure understanding of the historically high PMI gives the impression of speeding GDP growth. If we do see positive PMI figures, expect GBPUSD to start retracing its steps on the upper side. However, if we are surprised and the results are negative, expect GBPUSD to fall further.

The Aussie was the big winner yesterday, as the RBA surprised the markets with an unexpected change in monetary policy stance. Australia published better than expected AiG Performance service sector index, which supported the Australian currency.

 

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