Once again there wasn’t much by way of data yesterday to get Sterling moving in any particular direction. With construction PMI coming in as expected this, too, had no impact either way. All we saw in terms of Sterling’s gains was a 0.5% increase against EUR, and a 0.05% gain against the dollar.
Today there is service sector PMI out which is expected to come in at 57.6 which is quite important with this portion of PMI accounting for 70% of the UK’s GDP. News from Spain wasn’t’ so great yesterday as its unemployment rate was seen to rise by 0.54%, much of it within the manufacturing and construction sectors. When seasonally adjusted, however, unemployment has dropped there over the last 12 months by 350K.
USD, alternatively, is forging on as best it can. This is despite the fact that it missed estimates including missing a 204K employment target by coming in at 190K – this is still an improvement, though, as the previous figure had been 177K. With an impending interest rate rise on the horizon at some point, there are pundits forecasting GBP/USD to fall to 1.43 by year’s end. Today we’ll see ISM non‐manufacturing PMI, unemployment claims and trade balance numbers which should all contribute to some strength or lack thereof.
Elsewhere, Australia’s GDP was seen to grow less than expected in Q2 which has now sparked concern that the Aussies will dip into recession following 2 years of growth. With Australia tied so heavily to China economically, and the latter facing issues following its recent monetary manipulation, the Aussies are bound to feel the knock‐on effect.
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