Your Mini Mid-Week Update
- Sterling strengthens following positive service sector data
- Keep a close eye on the Euro
- US watching and waiting for interest rate decisions
By Rachael Kinsella
Sterling strengthens following positive service sector data
Sterling managed to recover slightly from its recent dip, thanks to positive economic data in the form of the latest service sector figures – an important indicator for the health of the economy. The latest Markit/CIPS Service Sector Purchasing Managers’ Index posted at 55.0 for March 2017, a significant increase on February’s 53.3. Positive economic data does not seem to be making much of a mark on the Pound in the current, Brexit-obsessed climate, however, and it is unclear how long Sterling will enjoy this latest boost.
Keep a close eye on the Euro…
Europe also received good news today with their PMI, demonstrating the highest growth for almost six years. However, in addition to rising cost pressures eating into margins in the sector, the French Presidential debate is causing concern for EU markets, and although the latest spat between the two front-runners has not knocked the Euro, the ongoing uncertainty about the election and what comes next has potential to do damage to the single currency. The Euro may struggle against its major currency partners, the Pound and US Dollar.
US manufacturing figures are at a six-month low at 52.8
US watching and waiting for interest rate decisions…
US manufacturing figures are at a six-month low at 52.8, dropping from January and February’s performance, and although there is still growth in the sector, the figures aren’t encouraging. The US Service Sector has also slowed down, maintaining growth overall, but also increasing at the lowest levels for six months. Jobs growth in the sector continues to grow, albeit at a slower pace, and the industry faces higher cost pressures as the prices of labour, food and basic materials increase.
Markets seem less concerned with this economic data at present and more focused on what the Federal Reserve has to say in its minutes this afternoon, looking for any hint of interest rate rises, how many, and when? This will undoubtedly have some effect on the US Dollar and could have knock-on effects on other, inter-dependent currencies. Watch this space…