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Sterling Strength Limited Ahead of UK Services PMI, Euro Weakens on Eurozone Retail Sales

Pound News: UK Construction Impresses, but GBP Investors Await UK Services Results

Tuesday’s UK construction PMI beat expectations, and the report indicated that new orders were also strong.

Following Monday’s forecast-beating manufacturing PMI, it bolstered market hopes that Britain’s economy was performing better than expected. However, Pound strength was limited as the UK construction sector accounts for a small percentage of economic growth.

Investors are instead awaiting today’s UK services PMI report. The services PMI will be the best indication yet of how Britain’s economy performed last month.


Euro News: Euro Recovery Limited by Poor Eurozone Retail Stats

After being weighed down by concerns about the future of German Chancellor Angela Merkel’s coalition government on Monday, the Euro saw a little relief on Tuesday. Merkel appeared to reach an agreement with Interior Minister Horst Seehofer and the political jitters faded.

However, the Euro was unable to recover too much as Tuesday’s Eurozone retail sales results fell short of forecasts. The data caused concern that Eurozone household activity was weakening.

The Eurozone’s final services and composite PMI reports from June will be published this morning. As the manufacturing print disappointed, the Euro could see further losses if these disappoint too.


US Dollar News: GBP/USD Remains Under Pressure Despite Mixed US Data

The Pound was unable to sustain a recovery against the US Dollar on Tuesday, despite the latest US data continuing to paint a mixed picture of the US factory outlook.

Investors have been concerned about signs that US trade tariffs are having a negative impact on US businesses. While US factory orders beat expectations in May, ISM’s June New York index fell from 56.4 to 55.

The US Dollar is unlikely to see any significant changes today with the US economic calendar quiet until Thursday, but any developments in US-China trade tensions could influence the US Dollar instead.


Canadian Dollar News: Canadian Manufacturing PMI Keeps CAD Buoyed

Despite persistent global trade uncertainties, the Canadian Dollar has been able to hold its ground against the Pound thanks to some optimistic domestic signals – as well as high Bank of Canada (BoC) interest rate hike bets.

Tuesday saw the publication of Canada’s June manufacturing PMI from RBC, which beat forecasts and came in at 57.1. The data indicated that Canadian manufacturers were not yet hugely spooked by the trade war jitters.

No notable Canadian data will be published today, but of course developments in US trade talks or NAFTA renegotiations could influence the Canadian Dollar ahead of Friday’s Canadian employment report.


Australian Dollar News: Investors Anticipate Australian Trade Results

The Australian Dollar saw mixed movement on Tuesday. Investors bought the currency back from its lows following the Reserve Bank of Australia’s (RBA) latest policy decision, but its gains were limited amid a lack of support.

Risk-sentiment remains low as trade jitters persist and the RBA was more cautious than hawkish, so later in the day GBP/AUD edged higher again.

Australian Dollar trade was also limited as investors awaited today’s Australian trade balance and retail sales stats, which are likely to drive AUD movement for the rest of the week.


Upcoming Data

Wednesday, 4th July

12:30 Australian Services PMI

02:30 Australian Trade Balance

02:30 Australian Retail Sales

09:00 Eurozone Services and Composite PMIs

09:30 UK Services and Composite PMIs


Thomas Taylor

FX Manager

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