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- Pound vulnerable ahead of UK services PMI
- Falling Eurozone retail sales set to dent euro
- US dollar to strengthen on resilient economic data
UK service sector slowdown may add to pound weakness
GBP exchange rates could experience further weakness this morning if January’s UK services PMI eases on the month.
After disappointing slumps in both the corresponding manufacturing and construction indexes any signs of a slowdown here could weigh heavily on the pound.
As the service sector is responsible for more than three quarters of the UK gross domestic product a weaker PMI could exacerbate worries over the economic outlook.
Further evidence that Brexit-based uncertainty is dragging on UK growth may drive GBP exchange rates into a fresh slump across the board.
Eurozone retail sales contraction to dent euro demand
The mood towards the euro may sour further today as forecasts point towards a sharp contraction in Eurozone retail sales for December.
If sales over the crucial Christmas period declined -1.6% on the month as anticipated this could leave EUR exchange rates under pressure.
With the Eurozone economy already showing signs of slowing any increase in consumer caution is likely to give investors fresh incentive to sell out of the single currency.
However, a stronger performance from the retail sector may help to limit the vulnerability of EUR exchange rates in the short term.
Resilient US economy forecast to support US dollar
With the US dollar back on a bullish trend investors are looking for another solid performance from this afternoon’s ISM non-manufacturing composite index.
As long as the service sector continues to demonstrate robust growth in January this is likely to give USD exchange rates an additional boost.
Although trade tensions with China have failed to abate signs of resilient growth within the US economy should limit the vulnerability of the US dollar.
If the negative impact of the recent government shutdown remains limited USD exchange rates look set to hold onto a positive footing this week.
Tuesday, 5th February 2019
09:30 GBP Services PMI
10:00 EUR Eurozone Retail Sales
15:00 USD ISM Non-Manufacturing Composite Index
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)