GBP Weakened as Construction PMI Barely Avoids Contraction, USD Surges on Labour Data

Poor UK Construction Data Weighs on Pound Sterling Exchange Rates

Pound Sterling was on mixed form at the end of last week and even strong gains against the commodity trio were nothing to do with appetite for GBP itself. Markets were disappointed by the UK construction PMI for January, which slumped to 50.2 – just a fraction above contraction levels – with the survey company Markit predicting that the sector could shrink in February.

The vital UK services PMI for January is set for release this morning – if it also slumps then GBP could start the week on the decline.

Cold Market Risk Appetite Supports Euro; GBP/EUR Weakens despite Eurozone Producer Price Slowdown

Eurozone producer price data may have shown weakening input costs growth in December, but the GBP/EUR exchange rate nonetheless slipped lower. With the anticipation and fallout from the day’s key US data weighing on the commodity currencies and Pound Sterling undermined by construction data, the Euro remained a solid choice for investors, especially given the recent data that showed the economy to be performing at a ten-year best.

Finalised Eurozone service and composite PMIs for January are likely to confirm the strong rate of growth in the Eurozone economy, but December retail sales figures could still cause complications. Weak sales volumes cause concern over the strength of inflationary pressures in the currency bloc, so there is potential for the Euro to soften today.

Strong US Payrolls Data Pushes GBP/USD Exchange Rate Lower

Expectations of a strong result from the US non-farm payrolls data pressured the GBP/USD exchange rate lower on Friday. Things worsened for Sterling after the figures were published, as the labour market added an above-forecast 200,000 jobs and December’s growth was revised higher to 160,000. Even more encouragingly, wage growth beat forecasts, clocking in at 0.3% on the month and at 2.9% on the year.

Today’s ISM non-manufacturing composite index could give the US Dollar even more impetus.

GBP/CAD Unable to Capitalise after US Data Extinguishes Risk-Appetite

GBP/CAD trended around opening levels on Friday, with the Canadian Dollar proving surprisingly resilient given the strength of the latest US data. There were no Canadian releases on the economic calendar and crude oil was unsurprisingly tumbling.

Bullish Gains for GBP/AUD Exchange Rate on US Data

The Australian Dollar tumbled yesterday in the face of an advancing US Dollar. An uptick in producer price growth during the fourth-quarter of 2017 was not enough to boost the ‘Aussie’, even though it points to building inflationary pressure in the future. Price growth accelerated from 0.2% to 0.6% on the quarter and from 1.6% to 1.7% year-on-year.

The ANZ Roy Morgan weekly consumer confidence index is set for release late tonight.

GBP/NZD Exchange Rate Remains near Opening Levels as ‘Kiwi’ Resists Weakness

The Pound was only able to record marginal gains versus the New Zealand Dollar on Friday, despite the intense downside pressure upon high-risk appetite from the latest US economic news.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

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