Pound wavers on mixed PMI figures
Philip McHugh March 25th 2022 - 2 minute read
The pound struggled to find any strong directional bias on Thursday, with the currency fluctuating in response to the UK’s latest PMI releases.
Sterling remains muted so far this morning, with GBP/EUR slipping to €1.1962 and GBP/USD subdued at $1.3178. GBP/CAD is stable at C$1.6530, while GBP/AUD and GBP/NZD hold steady at AU$1.7548 and NZ$1.8926, respectively.
Coming up, will we see the pound struggle today in the wake of some lacklustre UK retail sales figures?
What’s been happening?
The pound fluctuated through yesterday’s session in the wake of some mixed PMI releases.
While the services PMI outpaced expectations with a surprise expansion of growth. The accompanying manufacturing PMI reported a larger-than-expected slowing of activity.
Alongside ongoing concerns over the UK’s cost-of-living crisis in light of Wednesday’s inflation print and disappointing Spring Budget, this left Sterling mostly rangebound.
The publication of the Eurozone’s own PMIs lent some support to the euro on Thursday morning, after both the manufacturing and services indexes printed above expectations.
However, there gains proved short-lived, with the euro’s negative correlation with the US dollar resulting in EUR exchange rates slumping through the second half of the session.
This uptick in the ‘Greenback’ was driven by rising US Treasury yields as well as mixed risk appetite, although a sharper-than-expected contraction in US durable goods orders last month capped the US dollar’s upside potential through the second half of the session.
What’s coming up?
Kicking off today’s session was the publication of the UK’s latest retail sales data.
February’s figures reported a shock contraction in sales growth, which could leave the pound on the defensive through to the end of the week.
Also coming up this morning is the latest IFO business climate index from Germany. March’s index could weaken the euro today as economists predict business morale will have dropped sharply as a result of the war in Ukraine and concerns over rising inflationary pressures in the Eurozone.
Meanwhile, USD investors will look to a series of speeches by Federal Reserve policymakers for fresh impetus today. Will a broadly hawkish consensus help to propel the US dollar higher?