On 13 June, the UK government revealed legislation that would allow it to scrap parts of the Northern Ireland protocol.
- Pound firms after PMI data
- Weak Eurozone data undermines euro
- Another jump in US new home sales could boost the US dollar
The pound firmed on Friday as the UK released some better-than-forecast manufacturing and services PMIs. The results led to the UK composite PMI advancing to 52.4, up from 49.3 the previous month.
According to Markit economist Christ Williamson: ‘The survey is indicative of GDP rising at a quarterly rate of approximately 0.2% in January, representing a welcome revival of growth after the malaise seen in the closing months of 2019. Hiring has also picked up.’
UK data is lacking today but economists will be looking ahead to Thursday’s Bank of England (BoE) interest rate decision.
Euro undermined by IFO data
The euro tumbled on Friday, dropping to a seven-week low after disappointing Eurozone PMI data upped bets that policymakers from the European Central Bank (ECB) will continue to maintain loose monetary policy in the near-term.
Demand for the euro is unlikely to improve today following the release of the German IFO indexes. The business climate gauge unexpectedly slipped from 96.3 to 95.9 while the expectations measure fell from 93.9 to 92.9.
Only the current assessment index met forecasts by edging up to 99.1.
US dollar could rise if home sales improve
On Friday the US dollar rose against a handful of currencies after data showed the recovery of the US private sector continued to pick up in the first month of 2020. Flash US PMI data showed overall output increased at the fastest pace since March 2019.
The US dollar is also benefiting from a decrease in risk appetite amid rising concerns about the coronavirus.
Looking ahead to this afternoon, the US dollar could rise following the release of December’s new home sales data. Sales are forecast to increase by 1.6%.
09:00 EUR German Ifo Business Climate
15:00 USD New Home Sales (December)
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)