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Return to growth for UK service sector set to lift pound

business-articlesReturn to growth for UK service sector set to lift pound
  • Brexit jitters continue to limit pound appeal
  • Euro struggles after ECB decision
  • Canadian dollar extends losses as odds of BOC rate cut rise
UK services PMI growth could boost the pound
Comments from Chancellor Sajid Javid continued to stoke anxiety over Brexit yesterday, with markets spooked by the prospect of a divergence in standards between the UK and EU.
Until investors see positive signs of progress towards a future trade deal a sense of Brexit-based uncertainty looks set to keep the pound under pressure for the foreseeable future.
However, GBP exchange rates could find a rallying point this morning if January’s UK services PMI picks up as forecast.
Evidence of renewed growth within the service sector would ease worries over the health of the economic outlook.
Euro struggles as confidence falls
The euro remained under pressure in the wake of the European Central Bank’s (ECB) January policy announcement in spite of a lack of significant policy signals.
The surprising weakness of the Eurozone consumer confidence index put additional pressure on EUR exchange rates, meanwhile, as worries over the economic outlook picked up.
The euro may struggle to gain ground today with the Eurozone’s composite PMI for January coming in below forecasts at 52.2.
Canadian dollar looks for boost on retail sales rebound
Support for the Canadian dollar proved limited on Thursday as the Bank of Canada’s (BOC) dovish shift continued to weigh on sentiment.
As markets moved to price in higher odds of an interest rate cut the appeal of the Canadian dollar naturally diminished.
CAD exchange rates may find some support this afternoon, however, as forecasts point towards a modest recovery in November’s retail sales figures.
Evidence that consumer spending rebounded from its October slump could ease anxiety over the economic outlook, giving the Canadian dollar a potential leg up.
Philip McHugh

Philip McHugh

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)

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