Economic data due for release today could show the UK services sector is contracting, adding to fears that the country is heading for recession and knocking the Sterling Dollar rate (GBP/USD) as a result. Domestic political disarray and the ability for Eurozone Purchasing Managers’ Index (PMI) numbers to impress could take the Pound Euro rate (GBP/EUR) down to fresh multi-year lows, while mounting global trade fears are hitting the South African Rand (ZAR).
Pound Forecast: Will UK PMI Print Highlight Recession Risk?
The British Pound US Dollar exchange rate (GBP/USD) has seen a volatile start to the week, with the pair moving almost a full cent in overnight trade. There has, however, been little overall direction, although that could change with the release of UK Services PMI data for July. Concerns are mounting that this could fall below the break-even 50.0 mark for the second time this year and with services being the dominant sector of the UK economy, such news would add weight to the idea that the risk of a recession is growing. With any meaningful progress on the Brexit narrative not likely to be seen for another two weeks until European politicians return from the summer break, there’s little reason to believe that Sterling will be finding support any time soon.
Euro Forecast: UK Political Disarray Could Knock Sterling-Euro Rate
The Eurozone PMI print will also be in focus today and could lead to further weakness in the British Pound – Euro exchange rate (GBP/EUR). Data from the currency bloc in recent days has been on balance a little better than expected. If this trend can be maintained with the PMI readings, given the UK’s political disarray combined with the overhanging threat of a slowing economy, then the Sterling Euro rate would certainly be capable of making another test of last week’s lows.
Why Did it Move? Pound to South African Rand (GBP/ZAR) Exchange Rate
The British Pound South African Rand exchange rate (GBP/ZAR) continues to appreciate, with global trade tensions weighing. China has said it will retaliate against Donald Trump’s threat of a further tariff increase and the escalation here is driving risk aversion, taking a toll on emerging market currencies as a result. The cross traded as high at 18.077 overnight, having finished on Friday at 17.877 and traded as low as 17.140 earlier last week.