The Pound (GBP) stabilised against many of its peers yesterday as an upbeat Services PMI helped to offset growing concerns about ‘Brexit’.
Markit reported that the UK service sector grew from 55.2 to 56.2 in December, rising to a 17-month high as businesses did better than expected in the run up to Christmas. This lead the Composite PMI –after a similar uptick in both the Manufacturing and Construction PMI’s earlier in the week – to leap from 55.3 to 56.7 during the same period, its highest levels since July 2014.
Thursday saw a bit of volatility in the Pound Euro (EUR) exchange rate, but the currency pairing eventually ended the day close to where it began as the UK services data was countered by a rise in the Eurozone’s Retail PMI.
The Eurozone’s gauge for the retail sector rose from 48.6 to 50.4 thanks to a rebound in Germany, but fell slightly short of expectations that it would rise to 50.5 as Italy reported that sales continued to slump as political and economic uncertainty led consumers to avoid making large purchases.
‘Cable’ skyrocketed to a two-week high yesterday as a larger than expected fall in new private sector hires caused investors to worry that the US job market may not be as healthy as expected.
The ADP Employment figures showed that new hires in the private sector plummeted from 215k to 153k against expectations that it would only drop to 175k in December. The US Dollar (USD) fell as this led to speculation that today’s non-farm payrolls data will be negatively impacted, which could call into question the Federal Reserve’s hawkish predictions of three rate rises this year.
After trading flatly for much of Thursday, Sterling rallied against the Canadian Dollar (CAD) as markets anticipated a drop in employment, with today’s Canadian labour report expected to show that unemployment rose from 6.8% to 6.9% in December.
Despite some dips during the day, the Pound Australian Dollar (AUD) exchange rate recovered late on Thursday to end the session close to where it began as a slight lift in iron ore prices was offset by the UK’s PMI releases.
New Zealand Dollar
GBP NZD fluctuated yesterday as Sterling was softened by concerns that December’s bumper PMI figures were unlikely to continue throughout the year, while the New Zealand Dollar (NZD) continued to suffer from the drop in prices at the most recent dairy auction.