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- Uptick in services PMI may boost GBP
- Eurozone retail sales expected to plummet
- Rising activity in US service sector likely to bolster USD
The pound may start the session on strong footing this this week as the UK publishes its latest services PMI.
Economists currently forecast that the UK’s services index will have ticked up from 54.2 to 54.3 in January.
While this would leave the index well behind the high of 55.6 stuck in October it would still be the second strongest reading since last April.
With the UK’s service sector accounting for over 80% of domestic economic growth, the uptick in activity is likely to be welcomed by markets and allow the pound to drift higher today.
On the other hand, should the services PMI perform similarly to last week’s manufacturing and construction PMIs then Sterling may find itself beating a hasty retreat at the opening of this week’s session.
EUR may tumble following expected slump in retail sales
The euro may be forced onto the defensive this morning as the Eurozone publishes its latest retail sales figures.
Analysts predict that sales growth will have slumped from 1.5% to -1% in December, as the push for Black Friday sees consumers increasingly make their major Christmas purchases in November.
However following Germany’s shrinking retail sales data last week, which saw sales slip from 1.9% to -1.9% last month, there are likely to be some suggestions that the Eurozone estimates are too optimistic.
US Services PMI predicted to show growth
ISM will release the latest US Non-manufacturing PMI later this afternoon, with the US dollar likely to strengthen if activity rises as expected.
The services index is expected to have rallied to 56.3 in January after tumbling to a four-month low of 55.9 at the end of last year.
A rise in January would also help reverse the slowdown seen since October and would help to foster confidence that the US service sector will perform a little more robustly in the coming months.
With the service industry being the single largest generator of growth in the US economy, any signs that the sector may strengthen this year is also likely to increase the odds that the Federal Reserve will hike interest rates multiple times in 2018.
Monday, 5 February, 2018
09:30 GBP Services PMI
10:00 EUR Eurozone Retail Sales
15:00 USD Services PMI
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)