Bad day for the Pound and the Euro
5 March, 2015
Wednesday’s trading provided a number of key releases for the majors that ultimately drove exchange rates throughout the day. The day kicked off with a host of Euro-zone announcements beginning with Markit Services and Composite PMI which both fell shy of expectations whilst still posting a growth figure. The Euro was on the back foot from the open and this remained this case throughout the day despite excellent Retail Sales figures that posted an annual growth of 3.7%, much better than the 1.9% forecasts. Key support levels for EUR/USD had already given way in early morning so the trend and sentiment overrode the positive figures and pushed to its lowest level since September 2003.
The Pound had an equally bad day losing around 1% against all majors except for the Euro that remained stable whilst matching the pounds weakness. This was following the latest Services PMI figures which were only just shy of the 57.5 forecast as 56.7, and still a good growth figure. Sterling has been threatening a day like this all week but has only been rescued by good data with the recent gains seemingly having found their limit. The pound could now face a rocky couple of months leading up to the election, particular if votes are close and threatens another coalition situation.
With the pound and Euro both struggling yesterday, the obvious winner was the USD which was further boosted by strong Services and Non-Manufacturing PMI figures, both exceeding expectations. Today is interest rate decision day for the Bank of England and the ECB at lunch time. No change is expected on policy from either side but Mario Draghi’s comments will be listened to eagerly by the markets during his press conference at 1:30pm.
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