UK construction data out yesterday pushed the pound onward and upwards when it was revealed that the UK’s construction industry grew at its fastest pace for four months, and that construction companies are hiring staff at their fastest pace since 1997. This is one of the contributing factors to the fact that we’ve seen GBP hit its best rate against EUR in 21 months, and the same against USD against which the pound is at an almost 6 year high. We also saw a Nationwide report that showed that house prices in the UK are above the peak achieved in 2007 having seen an 11.8% increase year-on-year.
In Europe, poor PMI numbers for Germany and Italy contributed to EUR taking a dip (along with the dominating British pound). Germany did, though, have a drop in unemployment levels which did help in restricting the euro’s decline. EUR’s fortunes weren’t helped much either by the French Prime Minister’s comments that the ECB may need to devalue the currency because it is currently “overvalued” which is bad for growth prospects and industry output. The European Central Bank, at its meeting today, is widely expected to keep things the interest rate as is.
USD was able to give GBP a little run for its money yesterday following an ADP report that showed that US businesses added more employees than expected – an indicator that the US economy is on the up – the highest reading since 2012. May’s factory orders were disappointing, though, coming in at -0.5% as opposed to 0.8% in April, stifling the dollar somewhat. Today has huge potential to be USD positive with the release of non-farm payrolls; a day earlier than the traditional first Friday of every month due to Independence Day in the US tomorrow. The forecast stands at 213k, short of previous, however a positive number here is not out of the question considering the very good ADP numbers yesterday. We will also see the release of Average Earnings and the Overall Unemployment Rate in the US, along with Trade Balance. Slightly later in the day we look out for Markit Services and Composite PMI along with ISM Non-Manufacturing.
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