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Could positive UK services PMI boost the pound?

business-articlesCould positive UK services PMI boost the pound?
  • A positive UK Markit services PMI could provide the pound with support

  • Easing Eurozone inflation could weigh on the euro

  • US jobs data in focus
     

Stronger UK services PMI could bolster the pound

A strong UK services PMI could cause the pound to rebound this morning after weaker-than-forecast construction PMI dampened demand for the currency on Thursday.

As the UK’s services sector accounts for over 70% of total GDP, an improved reading for December (as forecast) would be beneficial for the pound.

The gauge is expected to increase from 50.4 to 50.7. While this isn’t a substantial improvement, it would take the figure further away from the 50 mark separating growth from contraction.

Euro could dip on falling inflation

The main catalyst for euro movement today is likely to be the Eurozone’s consumer price index.

CPI is expected to dip from 2.0% to 1.8%, with core inflation holding steady at 1.0%.

As slowing inflation is unlikely to encourage the European Central Bank (ECB) to adopt a more hawkish approach to monetary policy, the euro could dip if the results match forecasts.

US non-farm payrolls data ahead 

This afternoon sees a run of US data releases, including the nation’s services/composite PMIs and the always-influential non-farm payrolls report.

Sturdy jobs growth, low unemployment and strong average earnings figures would be US dollar-supportive. However, if any of these areas disappoint we may see the US dollar come under pressure before the weekend.

Upcoming Data:

Friday, 4th January 2019
08:55  EUR  German unemployment change
09:30  GBP  Markit services PMI
10:00  EUR  Eurozone consumer price index
13:30  CAD  Unemployment rate
13:30  USD  Change in non-farm payrolls

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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