Interest decision day

After a good start to the week the Pound saw a slight correction yesterday against most of its major pairs following weaker than expected PMI figures. After construction and manufacturing posted a better than expected growth earlier in the week, the services sector growth figures for the UK were less than forecast with a slight contraction down to 60 from 62.5 last month. This is still a positive growth figure but the shortfall on the figures was highlighted in sterling exchange rates in morning trading. The Euro-zone had a raft of early morning data which in the whole lent strength to the Euro. Services PMI figures posted a slightly better than expected growth figure, GDP revisions were as expected with 0.1% growth in the last year, and Retail Sales were improved from last month but still a little short of forecasts at -0.2% in October.

GBP/EUR rates recovered in the afternoon and finished the day just half a cent short of this year’s peak, buying levels are therefore still extremely good at present but don’t show too many signs of improving much further after gaining 2 cents in the last week. USD dollar data yesterday was also largely positive with 215k people gaining employment since last month, far better than the expected 173k. New home sales also increased from the previous month giving the Dollar a much needed boost.

Today is interest decision day for both the UK and Euro-zone. After the ECB cut rates last month there is no change expected from either bank on any of their monetary policies with rate hikes in the UK still a long way away. Any potential points of interest will come either from an accompanying statement from the BoE, or from Mario Draghi’s responses in his press conference at 1:30pm. At the same time as this conference the US will be announcing their latest GDP and jobless claims figures so expect a volatile afternoon for GBP/EUR and GBP/USD exchange rates.