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GBP/USD fell to a fresh three-month low yesterday and remains close to that mark this morning
The pound lost 0.4% against the dollar yesterday as UK business activity fell in August for the first time since January. Sterling rebounded from its lowest level since mid-June as the British composite Purchasing Managers’ Index (PMI) figures came in at 48.6, higher than the predicted 47.9.
By the end of the day sterling had lost 0.3% against the dollar and gained a similar amount against the euro. The pound’s weekly gains against the euro are close to 0.7%.
S&P Global released its August services PMIs for the EU and China which sparked new economic fears as weak data spooked investors.
Yesterday oil prices rose above $90 per barrel for the first time in 2023 as the world’s two largest oil producers boosted prices, despite most of the world struggling with higher energy costs.
As a result, motorists could be hit hard as traders in Russia and Saudi Arabia continue to cut a total of 1.3 million barrels from their daily output. In the UK, petrol is at its highest level this year with a pump price of 151.7p.
With the Wilko deal falling through last week, bargain retailer B&M has struck a deal to buy up to 51 stores, snapping up part of the 400-strong retail chain.
This morning, German factory orders plunged 11.7% month-on-month in July, considerably worse than market expectations of a 4% fall. This was the first drop in industrial orders since March and the steepest since April 2020.
On the data front, economists will receive the latest US services and composite PMI figures, while the US Federal Reserve is due to publish its Beige Book on economic conditions.
Central bank talks continue today across the US, euro area and UK.
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GBP: Retail sales soar
UK retail sales were unexpectedly high at 4.3% against a forecast of 2.0% and above the three-month average of 3.6%. However, with soaring inflation still impacting prices, experts warn that price hikes may be masking a drop in volume.
GBP/USD: the past year
EUR: Services PMI falls
Service sector PMIs for the eurozone dropped below 50, signalling a recession. Said weak activity may have been driven by the European Central Bank’s money-tightening policy.
USD: Dollar Index hits six-month high
The dollar index rose to its highest level since March on Tuesday, hitting 104.6 as disappointing PMIs came in from China and Europe. There are indications that the Federal Reserve will pause its rate hiking cycle in its next meeting.
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