GBP/EUR through 1.38 as stop orders are filled in early Europe

United States Dollar:

The pound pushed higher on Tuesday morning after data released at 9:30am showed February’s UK construction PMI beat forecast to print at 60.1. The reading is the highest since November and the twenty-second consecutive reading above the 50 level, which divides contraction and expansion. The sector is in rude health and this latest release showed sentiment for the rest of the year is positive. However, the uncertainty over the result of the general election was a headwind for the construction sector and was why some building companies were reported to be delaying spending decisions. Come the mid-afternoon, GBP/USD traded to a high of 1.5392 but it has fallen throughout the Asian session to open this morning at 1.5360, really just a result of dollar strength. UK services PMI is due this morning. Another good reading may provide some support but it’s ominous that the two previous positive PMIs have had little upside impact on cable over the last couple of days, although dollar strength has prevailed. There’s plenty of US data this afternoon including ADP non-farm employment and ISM non-manufacturing.

We expect a range today in the GBP/USD rate of 1.5310 to 1.5420.

Euro:

EUR/USD has traded a pretty flat range over the last 24 hours but it has gapped lower this morning after triggering stops under 1.1150. It trades at 1.1135 currently and looks vulnerable as ever to further losses. There’s a smattering of economic data due from Europe this morning, but nothing major and nothing likely to affect the euro too much in advance of tomorrow’s ECB monetary policy announcement. No change in policy is expected so the focus will be on what President Draghi has to say in his accompanying press conference. The euro has snapped lower against a range of currencies this morning, including the pound, and GBP/EUR trades at 1.3805 currently.

We expect a range today in the GBP/EUR rate of 1.3760 to 1.3860.

Aussie and Kiwi Dollars:

AUD/USD has traded just above 78 US cents over the last 24 hours. There was a reaction to Australian GDP data released overnight, showing an expansion of 0.5% in the fourth quarter against expectations for 0.7%. AUD/USD initially fell from .7815 to .7795 but then quickly retraced above .7800 – opening this morning at .7825. NZD/USD has been fairly steady in the meantime and trades at .7565 currently.

We expect a range today in the GBP/AUD rate of 1.9550 to 1.9760.

We expect a range today in the GBP/NZD rate of 2.0220 to 2.0500.

Data releases for the next 24 hours:

AUD: Retail Sales m/m, Trade Balance, RBA Deputy Gov Lowe Speaks

EUR: Final Services PMI, Retail Sales m/m

GBP: Services PMI

NZD: No data

USD: ADP Non-Farm Employment Change, Final Services PMI, ISM Non-Manufacturing PMI