Sterling sellers begin to enter the market

As we head towards the week’s main events tomorrow, sterling finds itself struggling to further its recent gains after 2 days of data falling short of analysts’ expectations. Manufacturing PMI was slightly short on Monday and again yesterday Construction PMI for the UK was just below par with growth at 60 compared to 60.8 last month. The markets were however positive in early trading following Nationwide’s announcement that house prices are now up by 11.1% since the same time last year. As the day developed GBP sellers began to take over with losses against most major currencies seen by close of business.

GBP/EUR losses were aided by a strong Euro after unemployment results showed an unexpected drop to 11.7% from 11.8%. Inflation was also under the magnifying glass once again as the Euro-zone Consumer Price Index continues to drop, now at 0.7% on the yearly figure, further down from 1% previously. This drop in inflation keeps the door firmly open for a further rate cut or increase in QE from the ECB over the coming months.

Today we have further key UK and Euro data ahead of tomorrow’s interest rate decision. Euro-zone PMI starts the day at 9am with UK Services PMI to follow shortly at 9:30am. The latest GDP figures for the Euro-zone will then be announced at 10am along with Producer price Index figures. The next few days are set to be pivotal for GBP/EUR exchange rates this month so make sure your broker is aware of your up and coming needs.

GBP/USD continues to slip from its 5 year high last month as the dollar finds renewed strength off the back off the current weak Euro. This is a trend that could well continue in the near term as rates begin a negative correction. This afternoon we have US Services PMI figures at 2:45pm were a solid increase is expected.