The pound traded in a narrow range at the tail end of last week’s session, with a gloomy construction index limiting the appeal of Sterling ahead of this week’s services PMI.
Sterling appears to be struggling again at the start of this week, with GBP/EUR sliding to €1.0891, GBP/USD tumbling to $1.2111 and GBP/CAD dipping to C$1.6021. Both GBP/AUD and GBP/NZD are holding steady at AU$1.7886 and NZ$1.8582 respectively.
Looking ahead, UK and US services PMIs are likely to drive currency movement at the start of the week.
What’s been happening?
The pound was left rangebound at the end of last week’s session, with Sterling holding its ground in the face of another gloomy construction PMI.
This showed that growth in the UK’s construction sector contracted for a third consecutive month in July, driven by a particularly worrying fall in new commercial projects.
The US dollar should have been the star of the show on Friday, with the publication of some top-tier US data.
However the US payroll report failed to elicit much of a response from USD investors as they instead focused on the re-ignition of US-China trade tensions after Donald Trump threated to slap fresh tariffs on Chinese exports.
Ultimately, the euro proved to be the biggest winner at the end of last week, buoyed by a stronger-than-expected rebound in Eurozone retail sales growth in June.
What’s coming up?
Kicking off this week’s session is the release of the UK’s latest services PMI, with the data potentially driving some early losses in the pound.
Economists forecast that growth in the UK’s dominant services sector is likely to have remained close to stagnation in July, likely stoking concerns over the state of the UK economy at the start of the third quarter.
Also in focus on Monday will be the publication of the US ISM non-manufacturing PMI, which may propel the US dollar higher this afternoon if growth in the US service sector remained as robust as expected last month.
Finally, the final release of the Eurozone’s composite PMI for July is expected to confirm that growth in the bloc’s private sector slowed last month, likely limiting the appeal of the euro.
