2020 was a difficult year for not just the manufacturing sector but for the whole UK economy, with the global coronavirus pandemic disrupting almost every industry in some way and resulting in uneven demand for manufacturers throughout the year.
- Will GBP extend losses after construction PMI?
- US Factory orders buoy the dollar
- Australian dollar storms higher after RBA decision
The pound plummeted on Monday after UK Prime Minister Boris Johnson set out a tough stance for the upcoming trade talks between the UK and European Union.
Johnson’s tougher stance weighed on GBP as it sparked fears that the country would reach the end of the 11-month transition period without securing a deal. This caused GBP to slump by close to -1.5% against the dollar and -1.1% against the euro.
Looking ahead, the pound could remain on a downtrend following the release of the UK construction PMI data. If January’s construction PMI still remains firmly in contraction territory Sterling could suffer further losses.
Factory orders to buoy the US dollar
The US dollar rose against a handful of currencies on Monday as data revealed that US manufacturing rebounded at the start of the year after contracting for five consecutive months.
The Federal Reserve’s preferred measure, the US ISM manufacturing PMI, rose to 50.9, the highest reading since July.
Meanwhile, the dollar could continue its rally today following the release of US factory orders data if orders rebounded in December.
Australian dollar rises as RBA leaves rates unchanged
The Australian dollar was able to make solid gains on Monday as the Reserve Bank of Australia (RBA) left rates on hold in its first meeting of the year.
The central bank was also surprisingly upbeat about the UK’s economic outlook given the Australian bushfire crisis and coronavirus concerns.
Tuesday 4th February
09:30 GBP Construction PMI (Jan)
15:00 USD Factory Orders (Dec)
Wednesday 5th February
01:30 AUD RBA Governor Lowe Speech
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)