Lack of UK data sees weakening of the pound
6 February, 2019
Yesterday saw a good amount of data releases from the USA and Europe, with little to help support the pound, which started the week pretty flat against the other majors. Markit services from Germany, Italy and the UK, which was the only UK data yesterday, came in negatively, whilst those of Spain, France and the eurozone saw a positive outcome. The eurozone’s retail sales also saw positivity, with the YOY coming in at 0.3% higher than expected but still significantly down on the previous figure.
It was an afternoon to forget for the US as all of their major data came in under expectation as another Markit PMI composite publication saw a slight decrease of 0.1% under what was expected (also the previous figure), although the Markit services PMI came in on par. It was the ISM Non-Manufacturing that came in well below expectation as it saw a drop of 1.3 points from the previous and 0.5 less than expected.
Due to these data releases, the pound saw a drop of over three-quarters of a cent against the euro, dropping to lowest levels since mid-January whilst this was also the case against the USD although only seeing a quarter-cent drop here.
Brexit will, of course, continue to shape sterling’s destiny with PM May in Northern Ireland today to discuss the current deadlock with Leo Varadkar, with meetings planned with EC supremo Jean-Claude Juncker tomorrow. Mrs May has reiterated the backstop will be part of the Brexit deal but has claimed that some changes will need to be made after MPs raised concerns last week.
Today could well see fortunes continue to dwindle for the pound as no UK data will be released and is open to reactionary movement following eco stats from the US, which tends to directly affect the strength or weakness of the euro and by extension, the pound. We will see the outcomes of mortgage applications, trade balance, non-farm productivity, unit labour costs and unit trade balance, some of which are expected to come in lower than previously which could strengthen the euro making it more expensive to buy if you have pounds sterling.
As ever stay in touch with your account manager at CI to ensure you get the best timing and price for your currency.