Pound US Dollar Breaks Through Key Level as UK Services PMI Beats Expectations

GBP Exchange Rates Firm on Smaller-than-Expected Service Sector Contraction, Pound US Dollar Breaks $1.40

The Pound (GBP) saw modest gains at the end of last week’s session, with the Pound US Dollar exchange rate soaring past the key level of resistance at $1.40.

GBP exchange rates strengthened on the UK’s latest PMIs revealed a much smaller-than-expected contraction in the service sector this month.

This helped to offset some truly abysmal retail sales figures, which reported UK sales growth plummeted a whopping 8.2% as January’s lockdown came into effect.

Centre stage today will be the unveiling of Boris Johnson’s roadmap for how and when to begin easing lockdown measures in England. Will the long-awaited plan be welcomed by GBP investors? Or will concerns that the government is being too cautious in lifting restrictions dampen Sterling sentiment?

Euro Boosted by Robust Manufacturing PMI

The Euro (EUR) ticked higher on Friday, with the single currency being underpinned by the Eurozone’s preliminary manufacturing PMI, which showed activity in the bloc’s factory sector struck a three-year high in February.

Aiding the Euro’s advance was broad weakness in the US Dollar (USD), which reflected well on the single currency due to the negative correlation in the EUR/USD pairing.

Coming up this morning, the publication of Germany’s latest business climate index could offer the Euro support at the start of this week’s session as business confidence unexpectedly jumped.

US Dollar Undermined by Improving Risk Appetite

The US Dollar (USD) extended its losses into a second consecutive session at the end of last week, amidst a broad-based USD selloff.

This pullback in the ‘Greenback’ came amidst a relatively upbeat market mood, which tempered demand for the safe-haven currency.

Turning to the week ahead, the focus for USD investors will be on progress being made on the next US stimulus package, with the US Dollar potentially facing headwinds if it appears Biden’s package will need to be watered down in order to pass it into law.

Canadian Dollar Strengthens in Spite of Disappointing Retail Sales

The Canadian Dollar (CAD) rallied against most of its peer on Friday, with the ‘Loonie’ seemingly shrugging off lacklustre Canadian retail sales figures as well as a dip in oil prices.

Australian Dollar Bolstered by Risk-On Trade

After soaring at the end of last week’s session, the Australian Dollar (AUD) sought to extend its bullish momentum into the start of this week as markets continued to favour risk-sensitive assets.

New Zealand Dollar Rising in Line with Improving Market Sentiment

The New Zealand Dollar (NZD) tracked a similar trajectory to the ‘Aussie’ in early trade this week, with the risk-sensitive’ ‘Kiwi’ extending the previous week’s gains as the market mood remained upbeat.

Matthew Andrews

Contact Matthew Andrews