You've landed on our UK website.
Click here to visit our USA website.

If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

GBP struggling before UK services data

currency-newsGBP struggling before UK services data
While the pound managed to stand firm against the euro on Tuesday, the currency’s performance against the other majors was less impressive.

The GBP/EUR exchange rate drifted between €1.1402 and €1.1369, GBP/USD closed the day at $1.2921, GBP/AUD fell from a high of AU$1.7029 to AU$1.6936, GBP/NZD edged up from NZ$1.7706 to NZ$1.7734 and GBP/CAD extended losses to C$1.6690.

What could drive exchange rates today? Keep scrolling to find out…

What’s been happening?

Yesterday’s UK construction PMI failed to impress, showing a decline from May and coming in worse-than-forecast.

The index slid from 56 to 54.8 – a reading of 55 had been projected.

Markit economist Tim Moore said of the report;

‘The construction sector experienced a growth slowdown in June, largely reflecting weaker rises in commercial building and civil engineering activity. Residential construction work continued to increase at one of the fastest rates since the end of 2015.’

Meanwhile, the Eurozone’s producer price index came in at -0.4% on the month and 3.3% on the year, below respective projections of -0.2% and 3.5%.

While this report had little impact, demand for the euro was limited by comments from European Central Bank (ECB) Chief Economist Peter Praet.

Praet quashed hopes of quantitative easing being unwound in the near future when he said; ‘Our mission is not yet accomplished. We need patience and persistence. We need to be patient, because inflation convergence needs more time to show through convincingly in the data.’

Although Canada’s Markit manufacturing PMI dipped from 55.1 to 54.7, the result was not viewed as being likely to have much of an impact on Bank of Canada (BOC) interest rate hike plans, so the Canadian dollar remained buoyant.

Finally, the New Zealand dollar stayed steady despite a slight fall in dairy prices at the latest Global Dairy Trade auction. The 0.4% deceleration followed six consecutive auctions of rising prices.
What’s coming up?

Without doubt, the biggest mover of GBP exchange rates will be the UK’s services PMI.

As the services sector accounts for over 70% of domestic GDP this data is always influential. The services gauge is expected to slip from 53.8 to 53.5, which would mark a slight slowing in output.

However, both the UK’s construction and manufacturing measures came in below forecast and if the services equivalent follows suit the pound could slide in the hours ahead.

GBP/EUR fluctuations could also occur in reaction to the Eurozone’s retail sales stats.

On a month-on-month basis consumer spending is believed to have increased by 0.3%, resulting in an annual figure of 2.3%.

An impressive result here could send EUR exchange rates higher.

With the US set to release durable goods/factory orders figures and minutes from the last Federal Open Market Committee (FOMC) meeting, US dollar volatility could be on the cards as well.

The minutes in particular will be closely scrutinised for references to plans to increase interest rates again before the close of 2017. Rate hike hints would be USD-positive.
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)

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.