The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
While forecasts had pointed towards a dip in service sector activity, the PMI’s decline from 49.4 to 38.8 left investors with little cause for confidence.
This fall into deeper contraction raised the odds of a negative first quarter growth reading as the service sector remains the major contributor to UK GDP.
Even so, rumours that the UK could see a loosening of social restrictions in the coming weeks helped to limit the downside pressure on GBP exchange rates.
Fresh weakness could be in store for the pound on Tuesday, however, if November’s unemployment rate rises from 4.9% to 5.1% as forecast.
Evidence that the labour market continued to weaken in the fourth quarter would add to existing doubts over the economic outlook, leaving the pound exposed to renewed selling pressure.
If the CBI distributive trades index slumps as sharply on the month in January as anticipated, this could see the pound shedding further ground against its rivals.
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)