The week of PMI data continues with both the UK and US economies expanding.
Construction PMI missed forecasts marginally posting a reading of 58.8 against an expected 58.9 which followed a strong 59.9 in October. Services PMI continued to expand in the month of October and improved on forecasts at 54.9. Following the 16-month high for manufacturing on Monday the underlying sentiment for the UK economy is positive, with all sectors demonstrating growth. Sterling benefitted briefly against the dollar off the back of these releases however, the gains were short lived after a string of data releases from the US helped the dollar claw back those losses.
US trade, jobs and services data beat expectations and helped support the case for a potential rate hike in December. Trade balance figures reported the deficit had shrunk to $40.8B against an expected $41B the lowest level in seven months, which then followed an employment change that highlighted a further 182,000 jobs had been added by US private employers.
The final eco-stat was non-manufacturing PMI which beat expectations and posted a reading of 59.1 against an expected 56.6. As the London session closed Fed Chair Janet Yellen appeared in front of the House Financial Services Committee regarding banking reform. Yellen did indicate that if data continues to be positive monetary policy could tighten stating, “If the incoming information supports that expectation then our statement indicates that December would be a live possibility.” The graph below highlights the dollar’s gain this evening;
GBP/USD Exchange rate
With Friday’s anticipated jobs data from the US make sure you check back to find out how the eco-stat effects GBP/USD.
Written by Kingsley Walker