Pound moves higher

Sterling enjoyed a positive day yesterday reaching a 3 week high against the USD and a 2 week high against the Euro. This strength was on the back of some further improved PMI Services data for the UK that rose to 54.9 in May from 52.9 in April and exceeded market expectations. These figures follow previously improved figures for Manufacturing and Construction PMI, which all indicate a sustained and potential increased GDP growth in Q2. The pounds gains were equally aided by poor Euro-zone GDP figures that confirmed a deeper contraction than expected at -1.1% on the year, and by poor unemployment figures from across the pond that have raised concerns over the strength of tomorrow’s nonfarm pay-roll release.

This morning markets have opened on a positive note after more house price data from the Halifax again confirmed a increase of 0.4% in May. However the mornings gains are likely to limited as traders eagerly await the interest decision from the ECB and BoE. Expectation are for a hold on all policies on both sides, but the potential for either a further rate cut in the Euro-zone, or further QE in the UK and both very real threats for this month’s announcement, and indeed those over the coming months. Either of these announcements should see the currency in questions devalued in minutes and so if you have an interest in GBP/EUR rates then ensure you keep in close contact with your broker to discuss the implications of these decisions on the cost of your transfer. As ever the markets will be listening closely to the ECB press conference at 1:30pm, 45 minutes after the decision release.