Pound above 1.3000 on domestic Poll-itics
The UK construction PMI beat expectations with a rise to 45.3, up from November’s 44.2. There was, however, a sharp drop in incoming orders and all three sectors continued to register declining activity mainly due to the political uncertainty. The Pound climbed a little higher despite a worse risk environment. Further impetus was added following the release of a poll showing a slight increase in the Conservative Party lead, and Sterling pushed through the 1.30000 mark on the Dollar and 1.1730 against the Euro. Global risk conditions then worsened and the Pound failed to hold above the 1.3000 level. Sterling has opened positively this morning, bouncing straight back to yesterday’s highs right after the bell. As well as this morning’s UK Services PMI’s markets will be monitoring domestic politics and global risk conditions.
Unease over the US outlook following the ISM data continued to unsettle market sentiment. Non-manufacturing data is scheduled for release today and will be important for underlying confidence in the outlook. The Dollar overall, was unable to make any headway with little evidence of defensive demand. ADP employment data is also expected today ahead of the monthly employment report on Friday. Given no expectations of an interest rate cut at this month’s Fed meeting the overall impact of ADP data is liable to be limited unless the jobs data is substantially different from consensus forecasts.
The Dollar was unable to make any significant impression while more fragile risk conditions halted the advance in commodity currencies. As of writing, The Dollar against Sterling is at 1.3035.
Early in European trading, there were reports that Euro-zone Finance Ministers were looking to push against negative ECB interest rates, although the overall market impact was limited. Opposition to negative interest rates could support the Euro over the medium term, although market attention remained focussed elsewhere with little Euro impact.
The Euro is currently sitting around the 1.1080 figure in early Europe with risk conditions remaining under scrutiny ahead of the Euro-zone PMI services data.
Data to watch
09:30 – GDP – Final Services PMI
13:15 – USD – ADP Non-farm employment change
15:00 – USD – ISM Non-Manufacturing PMI
15:30 – USD – Crude Oil Inventories