Good construction data helps sterling hold steady | Smart Daily Currency Note
GBP/USD – 1.5309
Sterling traded within a narrow range yesterday during a relatively quiet period for the global foreign exchange market. The UK currency performed strongly against an under pressure Australian dollar and held steady against the euro and US dollar after trading at a three-week high against its American counterpart on Monday. Sterling was supported by the UK construction purchasing manager’s index registering an expansion for the first time in 2013; growing beyond predictions to the highest level for eight months after having been expected to reveal a seventh straight month of contraction. Today sees the release of Purchasing Manager’s Index data from the services sector, which accounts for around 75% of the UK economy, where further positive news would mean growth across all three sectors. With Mervyn King’s final policy meeting as Bank of England Governor tomorrow and crucial Service sector figures emerging today, call Smart now to stay on top of market reaction and for the latest live rates
The US dollar largely recovered from weak manufacturing data released yesterday on the back of more speculation of an early unwind of quantitative easing. Figures yesterday afternoon showed the world’s largest economy’s trade deficit to have widened beyond expectations through April; up 8.5% to over 40 billion dollars. Many have taken the rebound in imports of consumer goods and business equipment especially to indicate strong domestic demand and accelerating growth in the economy – with the data pointing to gains in both household and business spending, whilst exports from a burgeoning American automotive industry are on the up. The job market report on nonfarm payrolls at the end of the week will be under significant scrutiny: it is expected to remain steady, though with the central bank’s Chairman highlighting unemployment as a key influence on monetary policy, a swing in either direction away from expectations will impact price levels. Talk to your trader now through what will be a busy afternoon for US data.