The Pound (GBP) retreated on Tuesday as GBP investors were left dejected as the UK’s services index capped off what has been a poor run of PMI figures.
The UK’s all-important service sector was shown to have seen only negligible growth in January, which alongside the gloomy manufacturing and construction PMIs paint a poor picture of the UK economy at the start of 2019.
There is no UK data of note today, potentially limiting movement in Sterling as markets brace for the Bank of England’s (BoE) first rate decision of the year on Thursday.
While the Pound Euro (GBP/EUR) exchange rate fell back yesterday, the pairing’s losses were capped somewhat by the release of the Eurozone’s latest retail sales figures.
Sales growth in the bloc was shown to have contracted a sizeable 1.6% in December, the steepest decline in sales since 2011, limiting the appeal of the single currency.
Meanwhile the Euro may struggle today following the release of some lacklustre German factory orders figures earlier this morning.
The Pound US Dollar (GBP/USD) exchange rate fell roughly half a cent on Tuesday as markets reacted to the latest ISM non-manufacturing PMI.
While headline growth in the US service sector was shown to have slowed faster than expected in January, USD investors appeared upbeat as employment continued to accelerate, indicating firms are still optimistic about the future.
Looking ahead, the US Dollar may strengthen this afternoon if the US trade surplus is shown to have narrowed as expected in November.
The Pound Canadian Dollar (GBP/CAD) exchange rate fell back yesterday, but was prevented from registering any major losses as the ‘Loonie’ advance was tempered by a dip in oil prices.
The Canadian Dollar may find itself giving up some ground later today however, with the latest Ivey PMI expected to report that domestic business confidence weakened in January.
The Pound Australian Dollar (GBP/AUD) exchange rate roared higher overnight on Tuesday following a speech by Philip Lowe in which the Reserve Bank of Australia Governor stated that the bank’s outlook on monetary policy is ‘evenly balanced,’ indicating that the bank is open to a potential rate cut.
The Pound New Zealand Dollar (GBP/NZD) exchange rate also strengthened last night, recouping some of Tuesday’s losses as speculation of an RBA rate cut prompted a sharp drop in market risk appetite.
However the New Zealand Dollar may struggle to consolidate its gains later tonight as economists forecast domestic unemployment will have risen in the last quarter of 2018.