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April

Sterling stronger again as end to Brexit debate in sight

Published: Thursday 04 April 2019

 
  • Sterling gains again as end to Brexit debate in sight

  • Eurozone data improves but Brexit overshadows

  • Canadian Dollar awaits improvement in key report

By David Johnson

 

Sterling ignores data, strengthens on light at end of long Brexit tunnel

A contraction in the UK Service Sector Purchasing Managers’ Index (PMI) was unexpected when the numbers were released yesterday but, in such uncertain times, I guess nothing should really surprise us. Sterling ignored it, as the Pound climbed again against the Euro and was commanding €1.17 first thing this morning.

Encouraging data fails to boost Euro

That rise in the Pound against the Euro was clearly not driven by the data. Eurozone figures on Retail Sales, Services PMI and others were quite upbeat and certainly beat the forecasts. Yet, as the UK appears to be tiptoeing ever nearer to a break from the EU under World Trade Organization (WTO) rules, the Pound is gaining strength. I think, at this stage, any kind of end to this interminable Brexit mess would be seen as a positive for the economy. It was summed up yesterday by a friend of mine who said, “we had a referendum result and MPs had one job and they couldn’t even do that well.” I suspect the backlash against members of parliament will be quite savage as and when the next election is called, which is perhaps why few are calling for one.

But B Word trumps all

Today’s news from Europe starts with the German factory orders data, which might show a return to growth. That will be followed by the UK Construction Sector PMI. If the service sector is any kind of guide, we need to brace ourselves for a poor number. The report from the last European Central Bank (ECB) meeting will be released at 12:30 GMT. As with yesterday, though, data isn’t the driving force for the Euro or Sterling right now. The B word trumps all. (With a lower case ‘t’, obviously).

Quiet afternoon for US announcements

This afternoon’s US data is limited to the weekly initial jobless benefit claimant count. That is expected to have risen marginally. Other than that and two Federal Reserve speakers, the afternoon is pretty quiet. US Dollar traders will already be looking ahead to Friday’s employment report in search of hints on March’s economic performance.

Canadian Dollar could strengthen

Canadian Dollar traders will be looking ahead to this afternoon’s Ivey Purchasing Managers’ Index, which is forecast to be an improvement over last month’s 50.6. That was barely into the growth side of the index; the pivot point being 50. Strength in the CAD should be expected if the index rises above 51.2.

Happy Birthday to you... and you... and you...

And Happy Birthday to Robert Downey Jnr, Graham Norton, Maya Angelou, Karen Brady and to NATO. That treaty was signed in 1949. A very Happy Birthday you Aries people.





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