As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Recovery in UK services PMI to shore up pound
- Euro looks to strengthen on higher Eurozone inflation
- Strong payrolls report set to support US dollar
Service sector rebound may benefit pound
After trending lower in the wake of yesterday’s Bank of England (BoE) interest rate decision and quarterly Inflation Report the pound could return to a stronger footing today.
With April’s services PMI forecast to rebound from 48.9 to 50.4 on the month, returning to a state of positive growth, this may offer GBP exchange rates a rallying point.
As the service sector remains the primary driving force of the UK economy an uptick here could encourage hopes of a stronger second quarter gross domestic product reading.
On the other hand, if the sector fails to push its way out of contraction territory the mood towards the pound could sour further.
Higher Eurozone inflation to boost euro
As Tuesday’s German consumer price index data bettered forecasts investors are looking to see another strong performance from the corresponding Eurozone figures.
If the headline inflation rate picks up from 1.4% to 1.6%, or better, this is likely to shore up the euro this morning.
Higher levels of inflation within the currency union would give the European Central Bank (ECB) greater incentive to return to a hawkish policy bias.
Even though no interest rate change looks likely for the foreseeable future, regardless of the strength of April’s inflation data, this could still give EUR exchange rates a solid boost.
US dollar looks for gains on payrolls report
With the Federal Reserve maintaining a neutral policy outlook the downside potential of the US dollar diminished yesterday, even as jobless claims data disappointed forecasts.
Further gains could be in store for USD exchange rates this afternoon if the labour market continues to show signs of tightness.
Another solid reading from the headline change in non-farm payrolls report may give investors fresh incentive to pile into the US dollar, especially if wage growth shows signs of strengthening.
However, a widening of the advance goods trade deficit could still dampen the appeal of the US dollar ahead of the weekend.
Friday, 3rd May 2019
09:30 GBP Services PMI
10:00 EUR Eurozone Consumer Price Index
13:30 USD Advance Goods Trade Balance
13:30 USD Change in Non-Farm Payrolls
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)