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Sterling Supported By Strong Services PMI - GBP/USD Gains Extended
Published: 5 Aug at 10 AM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Euro Crisis, UK, Inflation, Pound Euro Exchaneg Rate,
Towards the close of last week the Pound gathered support from the Bank of England’s decision to maintain its current level of asset purchases as well as surprisingly strong UK manufacturing/construction PMI.
As the European session began this morning the British currency was holding steady against the US Dollar and Euro.
However, Sterling was soon boosted by some significantly better-than-forecast UK news.
Although economists had forecast a gain in services PMI, they envisaged that the index would climb to 57.4 in July from June’s 56.9.
However, the gauge of UK services actually surged to 60.2 last month – the fastest rate since the end of 2006 and an indication that UK GDP for the third quarter got off to a strong start.
The index was compiled by Markit and the Chartered Institute of Purchasing & Supply.
In a statement issued with the report an economist with Markit commented: ‘Strong UK Services PMI data for July follows on from equally positive numbers from sister construction and manufacturing surveys, as the recovery becomes increasingly broad-based and gains further traction heading through the summer. Indeed, a composite reading of the respective output balances from all three PMI surveys reached a series record high during July [...] Although an early call on one month’s data, the forward-looking elements from the survey point to a further strengthening of GDP in Q3 as the UK heads towards “escape velocity” and self-sustaining economic expansion.’
The Eurozone also published a larger-than-expected gain in services PMI this morning, although the increase was considerably more modest than that seen for the UK. The result was also offset by the news that German services PMI unexpectedly declined in July. However, the Euro was supported against the Pound as the Sentix investor confidence survey for the Eurozone rose to -4.9 from -12.6.
In the hours ahead additional GBP/EUR movement could also be driven by retail sales figures for the Eurozone.
The positive UK news helped the Pound extend gains against the US Dollar, though further fluctuations could result from today’s US ISM non-manufacturing composite index for July. It is expected that the index will climb from 52.2 to 53.1.
UK data to look out for this week includes tomorrow’s manufacturing/industrial production figures and NIESR GDP estimate, Wednesday’s Bank of England Inflation Report and Friday’s trade balance data.
Investors will be particularly focusing on the inflation report and BoE Governor Mark Carney’s plan for interest rate forward guidance.
As the European session began this morning the British currency was holding steady against the US Dollar and Euro.
However, Sterling was soon boosted by some significantly better-than-forecast UK news.
Although economists had forecast a gain in services PMI, they envisaged that the index would climb to 57.4 in July from June’s 56.9.
However, the gauge of UK services actually surged to 60.2 last month – the fastest rate since the end of 2006 and an indication that UK GDP for the third quarter got off to a strong start.
The index was compiled by Markit and the Chartered Institute of Purchasing & Supply.
In a statement issued with the report an economist with Markit commented: ‘Strong UK Services PMI data for July follows on from equally positive numbers from sister construction and manufacturing surveys, as the recovery becomes increasingly broad-based and gains further traction heading through the summer. Indeed, a composite reading of the respective output balances from all three PMI surveys reached a series record high during July [...] Although an early call on one month’s data, the forward-looking elements from the survey point to a further strengthening of GDP in Q3 as the UK heads towards “escape velocity” and self-sustaining economic expansion.’
The Eurozone also published a larger-than-expected gain in services PMI this morning, although the increase was considerably more modest than that seen for the UK. The result was also offset by the news that German services PMI unexpectedly declined in July. However, the Euro was supported against the Pound as the Sentix investor confidence survey for the Eurozone rose to -4.9 from -12.6.
In the hours ahead additional GBP/EUR movement could also be driven by retail sales figures for the Eurozone.
The positive UK news helped the Pound extend gains against the US Dollar, though further fluctuations could result from today’s US ISM non-manufacturing composite index for July. It is expected that the index will climb from 52.2 to 53.1.
UK data to look out for this week includes tomorrow’s manufacturing/industrial production figures and NIESR GDP estimate, Wednesday’s Bank of England Inflation Report and Friday’s trade balance data.
Investors will be particularly focusing on the inflation report and BoE Governor Mark Carney’s plan for interest rate forward guidance.
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Source: moneytransfer.co.uk