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GBP/USD reclaims $1.30 after improvement in UK construction PMI

currency-newsGBP/USD reclaims $1.30 after improvement in UK construction PMI
The pound rebounded from a one-month low on Tuesday after the UK’s latest construction PMI printed above expectations last month.
Sterling is holding its ground this morning, with GBP/EUR stable at €1.1813 and GBP/USD rangebound at $1.3047. GBP/CAD has drifted up to C$1.7347 while GBP/AUD and GBP/NZD are holding steady at AU$1.9355 and NZ$2.0124 respectively.
Looking ahead, will we see the US dollar strengthen this afternoon on the back of another robust US services PMI?
What’s been happening?

The pound initially slumped yesterday, striking a new one-month low against the US dollar amid ongoing concerns the UK could be headed for a no-deal Brexit.
However, Sterling was able to claw back these losses later in the morning as the UK’s latest construction PMI beat expectations last month.
Whilst the construction sector continued to contract, it did so at its slowest pace since May, with the index jumping to 48.4 in January, just shy of the 50 mark which separates growth from contraction.
Meanwhile, the US dollar remained well supported on Tuesday following the publication of the latest US factory order figures.
These showed a marked upswing in order growth in December, with the largest increase in 16 months bolstering hopes for the US manufacturing sector.
Finally, in the absence of any notable data the euro was left mostly directionless yesterday, with the continued acceleration of the US dollar limiting the appeal of the single currency.
What’s coming up?

In the spotlight today we have the publication of the latest ISM non-manufacturing PMI in the US.
This is expected to report another robust expansion in the US service sector last month, likely buoying the US dollar later this afternoon.
For EUR investors the focus today will be on the Eurozone’s latest retail sales figures, where an expected slump in sales growth is likely to exert some pressure on the euro.
In the UK, the UK’s own services PMI could help prevent any further losses in the pound today as the final reading for January is expected to confirm the dominant service sector enjoyed its best month since September 2018.
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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