Pound Struggling Ahead of UK Services PMI
The Pound tumbled across the board yesterday as investors sold Sterling ahead of this morning’s dominant UK service sector PMI report.
Construction data showed that building activity decreased to a one-year low of 51.1 in August due to a slump in commercial investment. The survey signalled that firms were holding back and in some cases canning projects due to economic uncertainty caused by Brexit.
The downbeat report fuelled fears that the service sector also slowed last month. Construction accounts for just 6% of economic output, however, the services industry makes up over 75% of GDP so any signs of slowdown could seriously impact demand for the Pound.
Pound to Euro Exchange Rate Down Half a Cent
The Pound to Euro exchange rate softened by around half a cent yesterday afternoon as traders hedged against a low reading in this morning’s highly influential UK service sector PMI. A score of 53.5 is predicted and, while anything above 54.0 could give Sterling a boost, anything lower than the consensus could lead to additional GBP/EUR losses.
However, a report on Eurozone retail sales volumes, released later in the morning, is tipped to show that yearly sales growth decelerated from 3.1% to 2.5% in July, which could apply some pressure on the single currency.
Pound to US Dollar Exchange Rate Loses Ground on US Labor Day
The Pound lost ground to the US Dollar yesterday during thin trading conditions. US traders had the day off due to the Labor Day public holiday, which could have accentuated GBP/USD’s losses because smaller volumes of trades can create more volatility and larger moves.
Regardless of the impact of Labor Day, Sterling plunged across the board yesterday afternoon in what appeared to be a mood of caution ahead of this morning’s services PMI print.
The ‘Greenback’ faces a mixed bag of data this afternoon, with US factory orders tipped to slide from +3.0% to -3.3% and durable goods orders set to rebound from -6.8% to +1.0%. It remains to be seen how accurate the forecasts are and what impact the prints will have on the Dollar.
Positive surprises should send the US currency higher, while underwhelming results could have the opposite effect.
Pound to Canadian Dollar Exchange Rate Sinks as BoC Rate Hike Bets Grow
The Pound to Canadian Dollar exchange rate drifted lower by around a quarter of a cent yesterday as Bank of Canada rate hike bets continued to support the ‘Loonie’.
Better-than-anticipated Canadian growth numbers and recent hawkish statements from BoC officials have helped boost demand for the Canadian Dollar, even though oil prices suffered last week due to Tropical Storm Harvey and refinery closures in Texas.
Pound to Australian Dollar Exchange Rate Fluctuates as North Korea Impacts Risk Sentiment
Sterling fluctuated versus the Australian Dollar throughout yesterday’s session. The risk-sensitive ‘Aussie’ appeared vulnerable to news of further missile tests in North Korea, while the Pound weakened as slowing construction output raised the prospect of an underwhelming British service sector score for August.
Rhetoric from the Reserve Bank of Australia could have a big impact on GBP/AUD over the next few days, as a big speech from RBA Governor Philip Lowe is on the agenda.
Pound to New Zealand Dollar Exchange Rate Falls From 3-Month High
The Pound to New Zealand Dollar exchange rate depreciated by around -80 pips yesterday as Sterling slid from a three-month high.
It seems like a mixture of profit-taking and anxiety ahead of this morning’s dominant UK service sector report were to blame for the decline in GBP/NZD.
Data Released Today
09:30 GBP Markit/CIPS UK Services PMI (AUG)
10:00 EUR Euro-Zone Retail Sales (YoY) (JUL)
10:10 AUD RBA Governor Lowe’s Remarks at Board Dinner
15:00 USD Factory Orders (JUL)
15:00 USD Durable Goods Orders (JUL F)