Currency News and Forecast: Pound Undermined by PMI and Unemployment Concerns, US Dollar Recovers, GBP/EUR Holds

Pound to US Dollar Exchange Rate Falls, EUR/USD Strengthens

GBP exchange rates fell yesterday after the UK service sector PMI figures fell short of estimate, while the gathering pace of job cuts weighed on Pound to US Dollar and Euro exchange rates.

Meanwhile, Euro to US Dollar exchange rates picked up despite dismal Eurozone retail sales as France outlined a new coronavirus recovery plan.

US Dollar exchange rates recovered slightly yesterday as positive economic data from initial jobless claims and services PMI both impressed.

Ahead of the non farm payrolls later today set to drive USD movement, GBP/USD is ticking higher slightly, while the Pound to Euro exchange rate holds below the GBP/EUR 11-week high.

Pound (GBP) Exchange Rates Slips on Underwhelming Services PMI

The Pound (GBP) was on the defensive on Thursday as the UK’s services PMI printed below expectations and stoked concerns over the UK’s job market.

August’s final figures saw the index revised down from a preliminary estimate 60.1 to 58.8, which still signalled growth in the UK service sector. However, the index also highlighted the growing pace of job cuts in the service industry, with 34% of respondents reporting a drop in staffing levels.

In focus for GBP investors today will be the UK’s latest construction PMI, which came in lower-than-expected. Although the reading still indicates growth, it highlights unexpected slowing. This will likely give Pound to US Dollar and Euro exchange rates little impetus for movement.

 

Euro (EUR) Buoyed Despite Retail Sales Disappointment

The Euro (EUR) tracked higher through yesterday’s trading session, despite the Eurozone’s latest retail sales figures stoking concerns the bloc’s economic recovery is stalling following a surprise contraction in sales growth in July.

The uptick in the Euro may be partially attributed to France’s announcement of a new €100bn recovery plan, which is hoped will help to pull the country out of its worst economic slump since World War II.

Meanwhile, the Euro may struggle to find purchase in today’s session after Germany’s latest factory order figures, published at the start of the European session, came in below expectations.

 

US Dollar (USD) Bolstered by Upbeat Data Releases

The US Dollar (USD) extended its recent recovery on Thursday, initially climbing on the back of some upbeat employment figures as jobless claims fell to their lowest levels since the start of the pandemic last week.

Reinforcing these gains was the publication of the ISM non-manufacturing PMI as the US service sector enjoyed another robust month of expansion in August.

Coming up, the spotlight today will be on this afternoon’s non-farm payroll release. Will another solid increase in payroll numbers in August give the US Dollar a boost today?

 

Canadian Dollar (CAD) Tumbles amid Oil Price Slump

The Canadian Dollar (CAD) retreated yesterday, with investors shunning the commodity-linked ‘Loonie’ in response to a sharp slump in oil prices.

However, there is the potential for CAD exchange rates to bounce back during today’s session, if Canada’s jobs report impress.

 

Australian Dollar (AUD) Dented by Risk-Off Mood

The Australian Dollar (AUD) found itself on the back foot overnight on Thursday, with a sharp selloff in equity markets prompting investors to shun the risk-sensitive ‘Aussie’.

 

New Zealand Dollar (NZD) Subdued on RBNZ Negative Rate Expectations

The New Zealand Dollar (NZD) also struggled in overnight trade on growing speculation that the Reserve Bank of New Zealand (RBNZ) will take interest rates negative.

Matthew Andrews

Contact Matthew Andrews


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