Euro Clawback?

2 February, 2018

Nakhil Mahra

The first day of trading in February proved to be a busy one, with data from all 3 major currencies. First up was the UK with manufacturing PMI down slightly to 55.3 compared to 56.5 last month’s figure, resulting in GBP to lose half a cent against the Euro and USD after opening the day up from yesterday. The trend continued through the day as Euro and USD both clawed back some of the gains. USD was rallied by ISM Manufacturing up from last month 59.1% and spending on construction up to 0.7%, showing a healthy US construction market.

There was no major data announcement for the Euro but several low key data announcements, most of which were Euro positive. Keeping Sterling in check and keeping the gains to a minimum.

Brexit update

With the next round of Brexit talks not too far away, we could have a short buying window before the rates potentially go back down. Historically Brexit talks have proved very volatile for the currency markets and more often than not favour the Euro, should this be the case again the gains made in January could be diminished very quickly.

Theresa May has already said she will be looking to fight the post Brext transition period claiming she doesn’t agree with what has been laid out. Going by how difficult the first phase of negotiations went, EU negotiators will fight fire with fire and any move by Mrs May against the current plans will surely not go down well, this uncertainty surely to cause chaos in the markets.

Today’s data

Today is a busier day in the markets but again a quiet one on the EU data front. At 9.30 we have UK construction PMI, expected to fall y 0.2% possibly weakening GBP early doors. Followed by key data releases at 1.30 from the US, with the recent slide of the Dollar any positive news will be welcomed. Speak to your account manager today to discuss your best options.