Yesterday from the UK we saw data coming in to show that the service sector is going through what can only be described as a period of slow growth – so slow, in fact, that it’s the worst in two and a half years. With the slowdown impacting markets around the world, consumer spending and manufacturing have been hit hard too, but a slowdown in the services sector might be an indication that the UK’s recovery is running out of oomph.
After having started the day down against the euro, GBP was up by 0.25% by close of play, although it wasn’t the case against the dollar when GBP ended on a low of 1.51 IB.
Without any considerable data out of the UK today, or the rest of the week, in fact, it’s only really Thursday we’ll see some action when the BoE has its monthly meeting. Expect a good deal of speculation emerging from this as to when, how and what the interest rate hike will be.
The euro achieved almost a cent against the pound yesterday as French and German PMI data was seen to come in above expectations, indicating a decent increase in industry expansion. It wasn’t soon after that, however, that investor confidence data came in below expectation, denting any gains for the day. Tonight we’ll see Mario Draghi give a speech on the ECB’s monetary policy going forward. With the threat of negative inflation ever looming, there’s also the chance that asset purchasing will be increased to compensate.
Across the pond, US manufacturing data was seen to disappoint when both services and composite PMI came up short. This didn’t stop the dollar making gains against the other majors, however. Today will be a quiet one for the States – all we’ll see is trade balance data for August and a speech from the Fed’s Mr Williams.
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