GBP/EUR – Solid UK Services PMI Unable to Boost Pound Higher
Confirmation that the UK services PMI picked up sharply in March was not enough to give GBP exchange rates any significant boost today.
As the impact of the index’s return to a state of expansion had already largely been priced into the Pound following the initial reading, this limited the potential for any fresh gains.
Even so, if the corresponding construction PMI also demonstrates solid growth on the month, this may help to limit the risk of further Pound losses.
Although the construction sector only accounts for a small fraction of the UK GDP, an uptick here could still offer support to the GBP/EUR exchange rate in the short term.
GBP/USD – Pound Tumbles on Profit Taking
A bout of profit taking saw the Pound fall sharply out of favour in the wake of the bank holiday weekend, even though optimism over the economic outlook remained heightened.
As Pound exchange rates had gained significant ground in recent weeks, spurred on by the impending easing of national lockdown restrictions, investors were encouraged to sell out of the currency.
However, this sense of optimism ahead of non-essential retail shops reopening next week could keep a floor under the Pound in the days ahead.
With markets hopeful that the retail sector could experience a strong recovery in the second quarter, GBP exchange rates could avoid further downside pressure.
USD/GBP – Limited US Dollar Gains on Non-Farm Payrolls Increase
Thin trading volumes over the Easter bank holiday limited the US Dollar’s ability to capitalise on a stronger-than-expected non-farm payrolls report.
While the headline payrolls figure jumped to 916,000 in March, far exceeding expectations, this was not enough to give USD exchange rates any significant boost.
Even as signs point towards a greater stabilisation within the US labour market, the US Dollar saw limited traction as US Treasury yields fell amid the risk-on mood, in turn weighing on USD exchange rates.
If the Federal Reserve’s most recent set of meeting minutes prove dovish in nature, this could see USD exchange rates slipping lower across the board, with monetary policy unlikely to see any imminent adjustment.
EUR/USD – Smaller German Retail Sales Uptick Fails to Dent Euro
A smaller recovery in German retail sales failed to prevent the Euro from trending higher against its rivals last week.
Although the retail sector showed limited signs of recovering its lost momentum, the positive nature of the finalised raft of Eurozone manufacturing PMIs overshadowed the data.
Demand for the single currency could pick up further ahead of the weekend as forecasts point towards improved German trade and production data.
Signs of recovery within the Eurozone’s powerhouse economy may give EUR exchange rates a solid boost, even as the currency union grapples with tightened social restrictions once again.