The pound tumbled yesterday after the Bank of England (BoE) forecast a UK recession beginning in the fourth quarter of this year.
However, the pound is putting on a mixed performance this morning, with GBP/EUR drifting to €1.1851 and GBP/USD fluctuating around $1.3075. GBP/CAD has advanced to C$1.7230 while GBP/AUD and GBP/NZD have risen to AU$1.9261 and NZ$1.9903 respectively.
What’s been happening?
The pound firmed on Friday as the UK published some better-than-forecast manufacturing and services data.
The manufacturing index rose from 47.5 to 49.8 (approaching the 50 mark separating growth from contraction) while the services gauge jumped from 50.0 to 52.9.
Markit’s Chief Business economist said of the data: ‘The survey data indicate an encouraging start to 2020 for the UK economy. Output grew at the fastest rate for sixteen months amid rising demand for both manufacturing and services, suggesting business is rebounding after declines seen late last year.
Intensifying political and economic uncertainty ahead of the general election has started to ease, encouraging more spending and helping push business expectations of future growth to its highest since mid-2015.’
The euro, meanwhile, tumbled against its rivals as disappointing Eurozone PMIs added to concerns for the currency bloc’s economic outlook.
The US dollar strengthened before the weekend as flash PMI data for the US showed the fastest increase in output since March 2019.
What’s coming up?
There’s no notable UK data on the calendar today other than the BBA loans for house purchase figure.
However, the euro could edge higher today if the German IFO business climate, current assessment and expectations indexes show the improvement forecast by economists.
Over in the US we have new home sales figures for December. Economists predict that sales increased by 1.6% on the month in December.
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)