Sterling falls thanks to poor data – how will it be affected by today’s announcements?
Sterling struggled throughout Wednesday, falling across the board following the release of weaker-than-expected construction industry growth data. After struggling on Tuesday in the wake of weak manufacturing industry growth, the slowest rise in UK construction output since April saw sterling struggle as investors pushed back expectations of a Bank of England (BoE) interest rate hike. This outlook stands in stark contrast to that of the US Federal Reserve who are widely tipped to raise interest rates at their next meeting later in the month. When combined with positive data releases in the US, sterling fell, significantly, to a fresh seven-and-a-half month low against the US dollar throughout the afternoon – and faced similar troubles against the euro, falling to a three-week low against the single currency.
Today sees the release of the November purchasing managers’ index (PMI) for the services industry. This is typically the most influential PMI release of the week, with the services industry representing the largest proportion of the UK economy. Expectations are for an increase so anything less is likely to be damaging for sterling.
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