Pound Weakened by Lacklustre Services PMI

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GBP/USD 1 Week Chart

The Pound (GBP) softened against the other majors at the end of last week’s session following the release of a disappointing Services PMI as activity tumbled from 56.2 to 54.5.

The government’s Brexit bill will pass through the House of Commons this week and is likely to be a focal point for investors as they wait to see what amendments are made, with investors hoping that MPs will push for a softer exit from the EU than was outlined by Theresa May.


The Pound Euro (GBP EUR) exchange rate plummeted on Friday following the downbeat UK services report as markets fear that the consequences of Brexit are finally being felt by the British economy.

However the single currency is also facing growing pressure as France’s far-right leader Marine Le Pen launched her election campaign over the weekend. With her main rival on the right facing the possibility of fraud charges, she looks set to sail into the second round of voting. While she is not predicted to make it any further, the memories of Brexit and Trump are likely to sow uncertainty in investors.

US Dollar

Despite traders becoming increasing apprehensive towards the US Dollar (USD) in the wake of Trump’s inauguration, disappointing data caused GBP USD to slide.

The ‘Greenback’ was also strengthened by the latest Non-farm Payroll data which jumped from 157k to 227k in January, although weaker wage growth prevented any major uptick as it caused predictions for a March rate hike to slump.

Markets will continue awaiting the release of Donald Trump’s economic plans over the coming weeks, with the US Dollar likely to remain in a weakened state until they are published.

Canadian Dollar

Sterling fell by over half a cent against the Canadian Dollar (CAD) on Friday as traders grew concerned that the recent uptick in the UK economy is coming to an end.

The ‘Loonie’ has also been strengthened by the US Dollar’s prolonged period of weakness since Trump came into office, resulting in increased demand for higher-risk assets.

Australian Dollar

The Pound Australian Dollar (GBP AUD) exchange rate weakened further on Friday after plummeting over two cents the day before as Australia’s trade surplus reached a new record high.

While markets do not expect the Reserve Bank of Australia (RBA) to alter monetary policy when it meets tomorrow, investors are hoping that the recent uptick in Australian data may prompt the RBA to hint towards a rate rise later in the year.

New Zealand Dollar

Sterling routed against the New Zealand Dollar (NZD) last week despite reaching a new two-week high as growing concern over the impact of Brexit on the UK economy weighed heavily on the Pound.


Further Reading


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Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

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The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020


Posted to: News

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.

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