Three days into the week and data from the UK is still coming in strong. Following the growth in mortgage approvals and strong manufacturing figures that were reported yesterday, data from the construction sector this morning has also came in above forecasts. The Pound has retreated slightly from yesterday’s highest points against the Dollar, but is still sitting around a one year high on the US currency, making this a great time to discuss rates with your broker here for any Sterling to US Dollar transfers. It is also possible to fix a rate in advance for a future transfer using our forward-contract transfer option.
Pound Sterling – UK Markets
Sterling surged to the highest levels against the Dollar in a year yesterday reaching beyond the interbank level of 1.63. The rate has withdrawn slightly since yesterday but relatively is still very strong following more positive data from the UK today in the area of PMI Construction.
The PMI Construction figure for February came in at 56.5, well above the expectation of 53.3. Construction rebounded to growth in January following a contraction in December due to cold weather. February’s figure therefore strongly confirms that the construction industry is back on track for growth.
This also adds to yesterday’s strong data on mortgage approvals and PMI manufacturing that sent the Pound upwards. The third and last piece of PMI data comes tomorrow in the form of services data. This could help set the Pound up very well for continued strength should it also come in above forecasts.
US Dollar – US Markets
The US Dollar, still at lows against the Pound, has however re-gained a little since yesterday and has also gained on the Euro as manufacturing data came in at the strongest levels since May 2004.
Also influencing the Dollar’s movement is Federal Reserve Chairman Bernanke’s semi-annual testimony on monetary policy. Yesterday he signaled that inflations risk is seen as slow and job growth is also still slow, meaning that as expected, the US remains far behind rising interest rates as the UK and Europe are expected to in the coming months.
Euro – European Markets
The Euro is experiencing volatile movement in the run up to tomorrow’s rate meeting at the European Central Bank. Small gains have made been made so far today on Sterling as this morning’s Producer Price Index, which measures price changes, has grown to levels higher than expected.
This timely Producer Price Index data will add to concerns about high levels of inflation and no doubt form part of the discussion at tomorrow morning’s rate setting meeting. Although there is a wide expectation that rates will be held at 1 percent, Trichet’s press conference following the rate setting meeting tomorrow will be closely watched for clues as to when a rate rise might come.
Other Currencies – Highlights
The New Zealand Dollar fell to the lowest levels this year as Prime Minister John Key suggested that he expected a cut to the nation’s benchmark interest rate following the economic effects of last month’s earthquake.
The currency fell in particular to the lowest levels in eighteen years against the Australian Dollar as markets moved positions on the fact that that the Reserve Bank of New Zealand may cut interest rates.
Fed's Dot Plot Shows No Rate Hike in 2019, Dollar Weakens Sharply