- GBP exchange rates mixed despite disappointing services output
- EUR exchange rates decline as ECB repeat tired rhetoric
- USD exchange rates fluctuate on mixed data results
- Pound Sterling forecast to decline as traders digest weak services growth
Pound Sterling (GBP) Exchange Rates Advance from Intraday Lows
Despite the fact that British services output slowed beyond the median market forecast figure, the Pound Sterling strengthened in the aftermath of the publication. This is likely to be the result of relief that the key services sector didn’t contract. What’s more, weak services growth had already been priced in after manufacturing and construction failed to inspire confidence.
In response to the services data, Chris Williamson, Chief Economist at Markit, said;
‘The slowdown in the service sector follows similar weakness in manufacturing and construction to make a triple-whammy of disappointing news on the health of the economy at the start of the second quarter. The PMI surveys are collectively indicating a near-stalling of economic growth, down from 0.4% in the first quarter to just 0.1% in April. Some of the slowdown may be attributable to the early timing of Easter, though April also saw an increase in the number of companies reporting that uncertainty about the EU referendum caused customers to hold back on purchases, exacerbating already-weak demand linked to global growth jitters and ongoing government spending cuts.’
Euro (EUR) Exchange Rates Decline following ECB’s Economic Bulletin
Having outpaced most of its rivals yesterday, the Euro softened in the early stages of today’s European session. This is partly in response to trader profit-taking as investors took advantage of yesterday’s surge which opened up some attractive selling positions.
Additionally, after yesterday’s US data showed that non-manufacturing growth significantly bettered expectations, demand for the Euro cooled in response to improved bets regarding the timing of a Federal Reserve rate hike.
It is possible that traders are also beginning to price-in ‘Brexit’ concerns which has only really had a major impact on Sterling thus far.
The European Central Bank (ECB) published its monthly economic bulletin today. The report parroted previous versions, with policymakers once again showing willingness to use all available tools to stimulate Euro-area growth. With inflation in the Eurozone still well behind the central bank’s target, many traders feel that it is ‘when’ not ‘if’ the ECB makes policy even more accommodative.
US Dollar (USD) Exchange Rates Steady on Mixed Data Results
After the US ISM Non-Manufacturing/Services Composite significantly eclipsed the median market forecast, the US Dollar strengthened versus most of its major peers. However, USD exchange rates cooled overnight as traders locked in profits. Responding to the positive data, Anthony Nieves, chair of the trade group’s survey committee, said;
‘The majority of the respondents’ comments reflect optimism about the business climate and the direction of the economy.’
US ecostats produced mixed results today which has seen the US Dollar trending comparatively statically. Initial Jobless Claims failed to meet with expectations having risen above the market projection, but Continuing Claims printed positively having dropped beyond the median market forecast.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.2612 to 1.2686.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4463 to 1.4529 during Thursday’s European session.