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Will UK construction PMI be a positive surprise?

business-articlesWill UK construction PMI be a positive surprise?
  • Pound benefits from resilient manufacturing sector growth
  • Weaker Eurozone inflation weighs on euro
  • US dollar losses likely on durable goods orders fall
 
 
Pound vulnerable to soft construction PMI
 
A surprise uptick in March’s UK manufacturing PMI encouraged the pound to start the week on a stronger footing, trending higher across the board.
 
Although the surge in growth was largely driven by businesses stockpiling in anticipation of Brexit disruption this still offered GBP exchange rates a solid boost.
 
However, forecasts point towards the corresponding construction PMI remaining in a state of contraction as a result of Brexit anxiety.
 
If the construction sector slows further this could reverse the pound’s recent gains, especially if markets continue to see a lack of progress on Brexit.
 
 
Euro slides as Eurozone inflation falters
 
After yesterday’s disappointing dip in the Eurozone consumer price index the euro fell further out of favour, with the odds of further European Central Bank (ECB) dovishness increasing.
 
Even so, a stronger showing from this morning’s Eurozone producer price index data may encourage EUR exchange rates to return to a positive footing.
 
As long as the data points towards a stronger level of inflationary pressure within the currency union this should benefit the single currency.
 
Another underwhelming performance, on the other hand, would leave the euro exposed to further selling pressure.
 
 
Weaker US consumer spending to weigh on US dollar
 
Confidence in the health of the US economy took a fresh hit yesterday as February’s advance retail sales saw a surprise contraction.
 
With signs pointing towards an increased sense of consumer caution the mood toward the US dollar naturally soured, even as the manufacturing sector showed signs of resilience.
 
If this afternoon’s durable goods orders figure contracts as forecast this could see USD exchange rates shedding further ground, as weaker domestic demand bodes ill for the wider economy.
 
However, a positive showing could help the US dollar to recover some of yesterday’s losses.
 
 
Upcoming Data:
 
Tuesday, 2nd April 2019
09:30 GBP Construction PMI
10:00 EUR Eurozone Producer Price Index
13:30 USD Durable Goods Orders
 
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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