Sterling gains but French election looms

Yesterday was a good day for the pound as we saw a strong data release in the form of UK Markit manufacturing PMI. It was in fact the Euro that kicked of the day’s major releases with its own Manufacturing PMI report– showing a decrease to 56.7 from both a predicted and previous figure of 56.8. Whilst this was not a hugely poor figure, it was the strong UK release that caused rates to move. From a previous reading of 54.2 and a predicted contraction to 54, the UK posted huge growth to 57.3, and as a result the Pound began to make gains. By the close of business, it had stole around half a cent against the Euro and just over a cent against the USD. USD/EUR rates remained flat amidst little data and closed close to the open.

Today is a much busier day for ecostats, starting with the ECB non-monetary policy meeting followed by German unemployment first thing in the morning. After that we have UK PMI construction stats followed by Eurozone GDP and Producer Price index data. In the afternoon, as always the focus shifts to the US who release several reports, most notably ADP employment change, Markit services data and ISM non-manufacturing PMI. And in the early evening, we also have big releases in the form of the FED monetary policy statement and interest rate decision.

With so much going on t is likely to be both a busy and volatile day for exchange rates. In a heavy day of data from the US any poor figures here could see the rate drop from close to the best levels against the Pound we have seen since last September.

Add to this with GBP>EUR currently under pressure ahead of the French elections this weekend, with polls suggesting the Pro-Euro macron is ahead- should he win we would expect the Euro to strengthen. As such and following yesterday’s strong UK manufacturing data, could these be the best GBP>EUR rates in the short-term? Of course, If Le-Pen should win the reverse is likely to happen and Euro rates weaken however if the current polls are to be trusted this is certainly a risky strategy and one that could be costly.

Following this weekend’s French result we then of course have the UK election which will fast approach on June 8th. So be prepared for a bumpy time on the market, and if you have any upcoming requirements give your currency index broker a call today. Currency Index can offer some friendly guidance and several ways in which you can order currency, to help you take out the risk and secure you a bank busting rate of exchange. Speak to your Currency Index broker today for assistance with sending money abroad.