Quiet start to week focus on Thursday BoE rate decision

Yesterday saw a quiet start to the week with only a few data releases of note. In the morning Eurozone Markit PMI figures came in close to expectation, but it was the UK figure that showed a dramatic change – down to 48.2 from a predicted 49.1. Unsurprisingly the Pound which has been making continued losses across the board in recent weeks continued to drop. It did recover slightly in the afternoons session (likely a correction/ profit taking) but by the end of the day’s trading it closed lower than the open against the major currencies, EUR and USD.

This was also despite the Dollar posting poor ISM manufacturing data in the afternoon, which normally would have seen USD rates weaken against the pound and is a fairly clear indicator of current market sentiment and weakness of the Pound following the Brexit vote and ahead of Thursdays Bank of England meeting, where it is expected that UK interest rates will be cut. EUR>USD rates were up and down throughout the day although did remain relatively stable, closing the day close to its opening levels.

In the early hours this morning elsewhere in the world we saw the RBA announce their Interest rate decision and accompanying statement, which showed as many had predicted a cut to their headline Interest rate from 1.75% to 1.5%. As a result AUD weakened although not by as much as perhaps expected, perhaps unsurprising given that much of the market expected this cut and so was largely priced in to the market, combined with the current weakness of GBP.

This morning sees the UK release Construction PMI data, and the Eurozone release PMI data. And with recent UK data releases post Brexit all being poor eyes will be fixed on this result, as a poor figure here will only increase the chances of an aggressive cut from the BoE on Thursday. This afternoon focus shifts to the US as they release a raft sees a raft of ecostats from the US, including personal spending and Income reports.

Take note though readers – whilst a strong UK PMI figure here could see the pound stem its recent loses it is expected that there will be a rate cut of between 0.25-0.5% which will see only GBP rates suffer.

So should any of you have any requirements to buy currency from GBP get in touch today to avoid a costly drop in the rate. Speak to your Currency Index broker today for some friendly and professional guidance on how to get the most out of your currency transfer.