Pound Sterling Rallies on Robust UK Manufacturing Survey
The Pound registered gains versus some of its most-traded currency peers on Friday following some better-than-anticipated UK manufacturing data. The latest Markit PMI signalled that factory output expanded at its fastest rate for four months in August, printing at 56.9 and exceeding expectations of 55.0. The report detailed sturdy expansions in sub-sectors such as output, new orders, employment and export business.
Traders cheered the upbeat ecostat, which gave Sterling a much-needed boost following weeks of steady declines.
Pound to Euro Exchange Rate Rallies Half a Cent
The Pound to Euro exchange rate rallied by over half a cent on Friday as robust UK factory output numbers bolstered the appeal of the embattled Sterling.
GBP/EUR remains close to eight-year lows, however, and the majority of Sterling’s Friday gains actually came during the beginning of the New York session. This suggests it was US traders looking to take advantage of the low GBP/EUR exchange rate at the start of the month, rather than a direct consequence of the morning’s upbeat manufacturing PMI.
British construction data is due for release this morning but little market volatility is expected around the print as it only accounts for around 6% of UK GDP. Tuesday’s service sector PMI, on the other hand, accounts for over 75% of British output and could have a much greater impact on the Sterling to Euro exchange rate.
Pound to US Dollar Exchange Rate Surges as US NFP Disappoints
The Pound strengthened by around a third of a cent against the US Dollar on Friday as strong UK data met with soft US figures to send ‘Cable’ higher.
The ‘Greenback’ ran into trouble during the afternoon when the August US non-farm payrolls report printed significantly lower than markets had anticipated. The headline NFP print came in at 156,000, down from 189,000 previously and lower than forecasts of 180,000. This drove the US unemployment up one notch from 4.3% to 4.4%. US Dollar sentiment was dealt another blow by news that wage growth rose 2.5%, disappointing estimates of 2.6%.
Analysts warned that the poor numbers could give the Federal Reserve an excuse to hold off on hiking interest rates again in 2017 and could also pour water on hopes of the US central bank unwinding its multi-trillion Dollar balance sheet. GBP/USD reached its highest level since mid-August following the report.
Pound to Canadian Dollar Exchange Rate Sinks as BoC Rate Hike Bets Grow
The Pound to Canadian Dollar exchange rate continued to slide on Friday, depreciating by another -100 pips as Bank of Canada (BoC) rate hike bets surged following Thursday’s strong Canadian growth numbers. A couple of better-than-expected domestic growth figures breathed life into BoC rate hike expectations and the reaction from currency traders was clear: send the ‘Loonie’ higher. The commodity-sensitive Canadian Dollar also appeared to gain support following a rebound in prices of crude oil, its most-lucrative export.
Pound to Australian Dollar Exchange Rate Slides as Risk Sentiment Increases
Global risk sentiment was given a boost on Friday when the US labour market report came in weaker than most traders were expecting. This was seen to reduce the chances of a near-term rate rise from the Fed, which in turn encouraged traders to purchase higher-yielding currencies such as the Australian Dollar. The Pound dropped by over half a cent versus the ‘Aussie’ following the US jobs report.
Pound to New Zealand Dollar Exchange Rate Hits 3-Month High
Sterling soared to its highest level versus the New Zealand Dollar in almost three months on Friday. The ‘Kiwi’ remained under pressure from political anxieties, following a poll showing that the opposition Labour party had overtaken the incumbent National Party for the first time in 12 years.
Data Released Today
09:30 GBP Markit/CIPS UK Construction PMI (AUG) 51.9