Sterling running out of steam?
Yesterday returned mixed results for the Pound with losses recorded versus the Dollar as the pair reached a fresh five-month low. The losses were as a result of worse than expected UK GDP figures which showed that the UK economy is losing momentum as we approach the final quarter of 2015. Annual growth has been revised down from 2.6% to 2.4%, whilst quarter-on-quarter figures showed a consistent pace of 0.7%. In stark contrast, positive gains were made versus the Euro – Sterling adding a daily uplift of 0.7% against the common currency.
The US Dollar contracted slightly overnight, after Chinese manufacturing surveys were published with some less than impressive results. Gains were restricted as caution triumphed ahead of key U.S. jobs data due for release this Friday. Chinese Manufacturing Purchasing Managers’ Index (PMI) edged down to 47.2 in September, slightly up from a preliminary reading of 47.0. However this still marked its lowest reading since March 2009 and a deterioration from August’s 47.3.
The Euro came under pressure and closed lower on the day after a worse than expected inflation report that was released yesterday. The report showed that prices fell by 0.1% on yearly basis, falling short of expectations and below the European Central Bank’s target of just under 2%. That raised expectations that the ECB might decide to confirm the current rumours of an extension to their current Quantitative Easing programme.
For the most part, the Japanese Yen shrugged off mixed signals and closed the day at virtually its opening price versus the US Dollar.The Bank of Japan’s closely watched Tankan survey showed that confidence at big Japanese manufacturers plants worsened, leading some to bet that the central bank could take further stimulus steps. But service-sector sentiment improved for the fourth straight quarter to hit the highest level in more than two decades.