Markit Services and UK Inflation Dominate Proceedings

24 May, 2018

Paul Newfield

In what was a very busy day in the foreign exchange markets, GBP-EUR saw a ¾ cent swing whilst sterling saw movements of nearly a cent against the USD over a six-hour period. We are now currently seeing almost 5 month lows against the USD but for euro buyers, we are still in the upper 10% in terms of where the rate has been over the last year. So if you are selling USD back to sterling or buying euros, it is considered a good time to take action.

The majority of the data releases for the day, from all three of the major currencies, came in either under expectation or worse than the previous figure. Against the backdrop of street protests, from public sector workers, against Macron’s labour reforms in France, French ILO unemployment has risen since last month. Along with Markit Services data coming in somewhat lower than the previous, it wasn’t a good day for our cousins across the channel. Elsewhere, Markit services and manufacturing from the euro-zone and from Germany both came in negatively as well. At 9:30 am there was a raft of data from the UK, with all three types of inflation figures, including CPI, PPI and RPI again mostly coming in on the bearish side.

US Markit services and manufacturing did come in on the upside. However, the short gains were undone with home sales and crude oil stocks figures shortly afterwards. The FOMC minutes were announced at 7 pm with the expected announcement that the June rate hike will go ahead by 25 base points – another positive for the US economy.

Today we have speeches from Mark Carney at 9 am, Fed member Dudley speaking twice at 8 am and 9:15 am. Retail sales follow shortly afterwards with the ECB’s Praet speaking, before the ECB’s monetary policy meeting. Employment and home sales from the US wrap up the days’ major data releases, with Carney again speaking at 6 pm. If you have a requirement for buying euros from pounds, levels are still very good compared with the past 12 months and with the very present threat of Brexit and what rate volatility it may bring it may be prudent, especially if you a buying a property abroad, to not just fix your price but to also fix your cost by locking in a rate with us so that what you can stop any volatility from making your purchase more expensive.