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The impact of US services PMI was felt again in currency markets.
The pound cemented Wednesday’s gains against the US dollar yesterday and GBP/USD climbed to its highest level in around two weeks. Sterling found less traction against the euro, which also gained on the dollar by around 0.35%.
Wednesday’s US services PMI data continued to drive the moves, with fundamental data doing more than fiddly technical dynamics to shift the dial.
Wall Street stocks had a good day, a performance analysts chalked up to (surprise, surprise) interest rate expectations. All of the main indexes were on the rise through Thursday lunchtime as markets bet the Fed would be able to stick to its timetable for cutting rates.
The main evidence for this came in the form of data from the Bureau of Labor Statistics. New applications for unemployment aid, a figure viewed as a proxy for lay-offs, climbed to their highest level since January last week. Initial jobless claims also climbed slightly to 221k this week from last week’s 212k. Higher unemployment typically helps to cool price increases, hence the excitement among the pinstriped folk in board rooms.
The UK’s services and composite PMI in the S&P Global study for March were both revised down, from 53.4 and 52.9 to 53.1 and 52.8, respectively. Both figures were down from last month’s numbers but remain comfortably in positive territory.
However, the gap between UK and eurozone PMI figures that we’ve been highlighting for a while is closing. The eurozone composite figure climbed above 50 for the first time since May 2023, and the survey highlighted that expectations for future business activity were at their highest since February 2022. The pound could see some of its power against the euro eroded as a result of this shift.
Google is reportedly considering introducing the first paywall in its history. The tech giant is said to be drawing up plans to charge for an enhanced AI search function, partly because it costs so much money to provide the service.
Speaking of new technology, another band has thrown their hat into the hologram ring. The monochrome US rock band Kiss has sold the rights to the same company that made the hugely popular ABBA show for $300mn.
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GBP: Services slowdown
The UK’s dominant services sector can’t be expected to carry the team all the time. The S&P services PMI dipped slightly in March, as did the composite index. The slowdown will be a worry for the wider economy, but the UK may need to look to broaden its economic repertoire to see growth return to its former glories.
GBP/USD: the past year
EUR: Boost for homebuyers
Good news for anyone looking to buy a holiday home in Europe. European house prices fell in the final months of last year, but it was not an even shift. Prices fell in Northern and Central European nations while climbing in parts of the South, so you might want to swap those sunglasses for Birkenstocks to get full value for your purchase.
GBP/EUR: the past year
USD: Spotlight on jobs
Yesterday’s labour figures were the perfect amuse bouche for Friday’s non-farm payrolls. Economists expect that figure to have fallen significantly in March, an outcome that would add more fuel to the rate cut flames.
EUR/USD: the past year
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