Good data fails to support the Pound

For the second day in the row the pound has suffered losses against all major currencies despite better than expected data. UK PMI impressed on Tuesday for the Construction sector but the pound was still sold off as traders continue to re-adjust exchange rates in line with the latest expectation of interest rate hikes in the UK, which are now further away than first thought. Yesterday the PMI Services data was also better than expected with a figure of 60.5 against forecasts of 58.5. The pound failed to find any real support and dropped further against both the Euro and Dollar, despite weaker data for the Euro-zone.

PMI figures all fell short of consensus for the Euro-zone as well as the latest Retail Sales figures which only post a growth figure of 0.8% on the year, down from 1.9% last month. The fact the GBP/EUR still suffered losses despite good UK and poor Euro data highlights the negative sentiment and level of selling currently in the market. Buyers should be aware that rates could still get worse in the coming weeks but the announcements today could provide some short term relief.

The BoE interest rate decision is at 12:00pm and no change is expected despite 2 members of the MPC voting for a hike last month. The more interesting decision will be that of the ECB at 12:45pm, and more importantly the press conference that follows at 1:30pm. As ever Mario Draghi’s words will be market movers and Euro buyers can only hope for another downbeat tone from the ECB President. After lunch at 3:00pm the US Dollar takes focus with latest ISM Non-Manufacturing PMI figure for the US.