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Could pound fall further on UK construction PMI?

business-articlesCould pound fall further on UK construction PMI?
  • Easing construction sector PMI could extend pound losses

  • Weaker manufacturing growth to weigh on US dollar

  • Global growth worries limit Australian dollar appeal


Weaker construction PMI to put additional pressure on pound

The mood towards the pound could deteriorate further this morning if December’s UK construction PMI weakens on the month as forecast.
After yesterday’s underwhelming performance from the manufacturing PMI any fresh signs of weakness within the UK economy are likely to weigh heavily on GBP exchange rates.
Although the construction sector only accounts for a small fraction of the UK gross domestic product any softening of the PMI could still encourage pound selling.
On the other hand, evidence of resilience within the UK economy may offer GBP exchange rates a degree of support.

US dollar vulnerable to easing US manufacturing sector growth

USD exchange rates may return to a weaker footing today as forecasts point towards an easing of the ISM manufacturing index on the month.
Further evidence that the US manufacturing sector is losing its previous momentum could dent the appeal of the US dollar.
With the Federal Reserve already looking set to take a more cautious view towards monetary policy this year any signs of weakening economic activity could drive USD exchange rates sharply lower.
However, as long as the index remains firmly within a state of expansion the downside pressure on the US dollar is ultimately likely to prove limited.

Global slowdown worries weigh on Australian dollar

Worries over the global growth outlook look set to keep the Australian dollar under pressure in the near future, following the contraction in China’s manufacturing PMI.
As the Australian dollar is a common market proxy for the Chinese economy worries over the prospect of an imminent slowdown are likely to keep AUD exchange rates on the back foot.
Unless the general sense of market risk appetite markedly improves AUD exchange rates could remain biased to the downside.
Underwhelming US data and a weaker US dollar, however, may still offer the Australian dollar a boost today.

Upcoming Data:

Thursday, 3rd January 2019
09:30 GBP Construction PMI
15:00 USD ISM Manufacturing Index

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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