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Sterling Slumps Against Most Major Currencies Despite Strong Manufacturing Data

Pound News: Sterling Struggles to Make Gains Despite Positive Manufacturing PMI

Yesterday the Pound fell against most of the major currencies despite positive data released from the UK.

Markit’s manufacturing PMI for December came in at a better-than-expected 54.2, despite a predicted fall.

However, IHS Markit director Rob Dobson stated:

‘Any positive impact on the PMI is likely to be short-lived, however, as any gains in the near-term are reversed later in 2019 when safety stocks are eroded or become obsolete.’

The UK is set to see December’s Markit construction PMI released today. While the construction sector only accounts for a small percentage of total GDP, a negative result here could pile further pressure on the Pound.

Euro News: Euro Slumps against Most Major Currencies as Eurozone Manufacturing PMI Falls

Although the Euro managed to gain against a broadly weaker Pound on Wednesday, the common currency slid against several of the other majors.

Yesterday saw the release of Markit manufacturing PMIs for the Eurozone.

The PMI for Spain showed a larger-than-forecast contraction from 52.6 to 51.1, and the PMI for Germany followed the prediction of falling to 51.5, while the Eurozone as a whole fell to 51.4.

The PMIs for both Italy and France were below the 50 mark, with France remaining steady at 49.7, and Italy’s PMI increasing to a higher-than-expected figure of 49.2 from a previous 48.6.

There is a lack of any influential data for the Eurozone today, with the focus on Friday when German unemployment data and the Eurozone consumer and producer price index figures will be released.

US Dollar News: Weak Chinese Manufacturing PMI Bolsters Safe-Haven USD

The recent easing of US-China tensions caused investors to pull out of the safe-haven USD, as a phone call between the two leaders, President Donald Trump and President Xi Jinping, was described by Trump as a ‘long and very good call’.

However, weak manufacturing data from China signalled that the superpower’s economy may be slowing, as the PMI dropped below 50 for the first time in two years. This caused USD to push back against other major currencies over the course of yesterday’s session.

This afternoon will see the release of US jobless claims and ADP employment change figures. Disappointing results would be US Dollar negative.

Canadian Dollar News: CAD Ends 2018 With the Worst Annual Performance in Three Years

The Pound Canadian Dollar (GBP/CAD) exchange rate slumped over the course of yesterday’s session despite the Canadian Dollar ending 2018 with the worst annual performance in three years.

Despite the Canadian Markit manufacturing PMI for December showing a contraction from 54.9 to 53.6, CAD continued to make gains on the British currency.

Tomorrow will see the release of Canadian employment figures. An increase in the unemployment rate would be CAD-negative.

Australian Dollar News: Cooling US-China Trade Tensions Bolster the Australian Dollar

The release of the Caixin manufacturing PMI for China on Wednesday morning signalled that the Asian economy is slowing down, as the figure stood below the 50 mark at 49.7, falling from a previous 50.2.

Despite this, the cooling between the US and China is a likely factor in the ‘Aussie’ being able to push back against currencies such as GBP and EUR.

If the cooling in trade tensions between the two powers continues it seems likely that it will benefit the Australian Dollar.

Upcoming Data

Thursday, 3rd January

09:30     UK PMI Construction (December)

13:30     US Continuing Jobless Claims

13:30     US Initial Jobless Claims

15:00     US ISM Prices Paid

15:00     US ISM Manufacturing PMI

Jack Wiles

Currency Dealer

JSW@fcgworld.co.uk

 

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