Another Bright Morning Dawns For The Pound

It’s a similar story to yesterday morning for Sterling with PMI figures – this time in construction rather than manufacturing – coming in once again above target. This will add yet a little more antidote to circulating fears born from last week’s dire GDP figures although Sterling did experience some downwards movement over night. How long any momentum can be sustained will be key before tomorrow’s third day of PMI data which may prove to be the Achilles heel for Sterling this week coming in the services sector that has disappointed of late. If you would like a broker to inform you of when we see these morning spikes in Sterling (or falls if you are converting another currency into Sterling) then just get in touch and a broker will call you to discuss rate monitoring.

Pound Sterling – UK Markets

PMI construction data has met the strong precedent set by yesterday’s PMI manufacturing data and similarly given the Pound a boost since 9.30 am. This was however following some ground being lost over night after yesterday’s gains. The PMI construction figure has come in at 53.7 beating the forecast of 49.7. This figure is for January but will still help ease some of the prevailing fears from the poor GDP figure for the last quarter of 2010. A report from the National Institute of Economic and Social Research has also suggested that the Bank of England will have to raise rates three times this year to combat boosting inflation – the sort of report that will give the Pound some more momentum.

US Dollar – US Markets

The US Dollar has tumbled over the past twenty four hours as better economic data from the UK, Europe and across the world encouraged investors to be more risky – and the Dollar’s use as a safe-haven back up due to political uncertainty in Egypt becoming more redundant. The US Dollar itself did in fact also experience some good data in the form of the strongest ISM Manufacturing data since May 2004 but the Federal Reserve’s ongoing loose monetary policy is preventing the currency from gaining momentum. Markets will be interested to see the impact of ADP employment data this afternoon and whether an above or below target figure will stimulate Dollar movement in either direction.

Euro – European Markets

This morning saw the European Producer Price Index, which measures change in prices of commodities, coming in for December at a much better than was recorded in November just above forecasts at 5.3 percent. The Euro has had a good day against the Dollar but data in the UK is pushing Sterling up more than the single currency can withstand. The Euro did however also receive a boost yesterday on PMI manufacturing data similarly to the Pound. With inflationary pressures and speculation over interest rates rises rife in both economies the two currencies seem likely to continue in their volatile tug of war in the short term.

Other Currencies – Highlights

The Brazilian Real has pushed up to a four week high after manufacturing reports showed strong increases in production. The figures demonstrate that growth is at a much higher rate than that in the UK or the US, alongside other emerging markets with China in particular experiencing exceptionally strong growth. This gain in the Brazilian Real is despite moves by the Central Bank to curb the rise which is damaging to the nations exports and could affect investment. Currency Solutions are one of the only foreign exchange firms to help clients with Brazilian Real transfers so please get in touch to find out how we can help. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.