The Pound exchange rate has been trending in a tight range against the Euro (GBP/EUR) while climbing against the US Dollar (GBP/USD) and Australian Dollar (GBP/AUD) in Wednesday’s session as markets digested economic data.
UK Services PMI Falters, Pound Sterling Exchange Rate Climbs
After yesterday’s disappointing UK Construction Purchasing Managers’ Index (PMI), investors were hoping today’s Services and Composite PMI’s would fare better. The Construction PMI had shown an unexpected decline in September; instead of holding steady at 52.9, the ecostat dipped to 52.1. Meanwhile, Monday’s Manufacturing PMI had surprised to the upside, with a positively revised August reading coming in at 53.0 and another climb in September to 53.8. Economists had forecast a more pessimistic 52.5.
However, Wednesday’s Services PMI faltered, coming in at 53.9 in September after August’s 54.3 and the expectation of a round 54.0. The UK Composite PMI slipped from 54.2 to 54.1 but remained higher than the 54.0 forecast.
Global Reach Chief Economist Eimear Daly commented:
‘This was another solid increase in business activity across the UK services sector, which is all the more impressive considering continued Brexit uncertainty. The survey showed the fastest rise in employment in seven months. Backlogs of work lengthened for the fifth straight month and higher wage bills, a result of labour shortages, show the sector is approaching its supply capacity and faces a cyclical slowdown. At the margin, this emphasises the need for the BoE to tighten policy more aggressively than expected on an orderly soft Brexit. This is Sterling supportive on a long-term basis.’
Other events of note today will be the latest Eurozone Retail Sales stat for August. Economists had forecast a rise from 1.1% to 1.7%, but the ecostat did one better, printing at 1.8%. The US also has some interesting data releases on the cards, including the latest ADP Employment Change figure, mostly seen as an indicator to the following Non-Farm Payrolls stat due on Friday.
Meanwhile, in Australia, the latest Building Approvals stat showed a massive decline. The August figure contracted by -13.6% on the year, after the previous month’s -5.6% decline. Economists had forecast a slight pickup to -2.5%. The reading was the sharpest drop in 2018, attributed to tighter credit conditions and unaffordable house prices.
However, some are optimistic that there could be some stability ahead. ANZ Economist David Plank said: ‘weakness in dwelling prices is passed its peak;and some stabilisation towards the end of this year is possible.’
Today’s Interbank Exchange Rates – GBP/AUD, GBP/USD, GBP/EUR
The Pound to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 1.8175, around +0.65% higher.
The Pound to US Dollar (GBP/USD) exchange rate is trading at levels of 1.3014, approximately +0.27% firmer.
The Pound to Euro (GBP/EUR) exchange rate is trading in the region of 1.1244, around +0.07% higher.