Pound Trims Losses against Euro and Dollar
Pound Sterling - UK Markets
The Pound recovered from a record lows against the Euro and Dollar yesterday, trimming its losses as service sector data came in better than expected.
Trading at 81.55 per euro and climbing back to 1.78 this morning against the Dollar the Pound remains under pressure but the decline has temporarily slowed.
Data yesterday showed a slightly better than expected index in the Service Sector's PMI, up to 49.2 from 47.4 in July. While the overall picture remains weak, with Construction, Manufacturing and Services all registering a contraction, the results were better than the expected 47.0 indicating the industry is faring slightly better than reports make out.
All eyes are on the MPC today as interest rate decisions are to be announced. The expectation is for the Bank to leave the decision on hold until later in the year.
US Dollar - US Markets
The US Dollar continues to rise against the Pound and Euro but slipped against Yen yesterday, supported by a decline in oil prices and further evidence of contraction in the Eurozone.
Despite better than expected manufacturing data coming in yesterday with the relatively strong Dollar making imports cheap, the Fed's “beige book” confirmed the economy is still weak. The book, a nationwide snapshot of the US economy indicates the Federal Reserve is likely to leave interest rates unchanged at their September 16 meeting as conservatism remains the order of the day amongst the major currencies.
Euro - European Markets
The Euro fell to below US$1.44 on Wednesday for the first time since late January - in anticipation of lower interest rates for the eurozone following the ECB decision today.
Statistics from the European Union show the 15 nation economy contracting by 0.2% in the second quarter revising annual growth stats to 1.4 rather than 1.5%. The Indian summer for the US Dollar is a result of the effects of the credit crunch announcing their arrival in the Eurozone.