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PMI data helps boost the pound's weekly gains against the US dollar
Sterling enjoyed a positive day on Thursday, boosted by Purchasing Managers Index (PMI) data that was broadly more positive in the UK than in the eurozone.
Overall, GBP approaches the end of a busy week around 0.75% stronger against the euro than at the start of the week, and over 1.3% higher against the US dollar.
Yesterday’s data highlights were the ‘flash’ reading for Services and Manufacturing PMI, which were 50.5 and 46.7 respectively. Both were higher than expected, and services, which are the more important reading for the health of the UK economy was back in positive (i.e. optimistic) territory over 50 for the first time since July. German, French and eurozone PMI was still generally well down in the 40s.
However, before the champagne corks start popping, S&P Global Insight did point out that the UK economy is essentially flatlining: “The survey’s forward-looking indicators suggested that recession risks will likely remain elevated into the New Year, as new orders decreased for the fifth month running amid ongoing reports of subdued sales opportunities,” said economic director, Tim Moore.
There appear to have been no negative ramifications from the tax-cutting Autumn Statement on Wednesday.
We have just had a reading for GfK Consumer Confidence in the UK for November, which rose to -24 from -30 in October. This exceeded market expectations of -28 and showed consumer mood improved.
Germany’s GDP for Q3 was just confirmed to have contracted by 0.1%, reversing the 0.1% growth seen in the previous three months. Later this morning there will be more insight into the German economy, with the Ifo Business Climate report.
One positive for the UK economy, if a headache for the government, was an uprating in the net migration numbers, to 745,000 in 2022. While there were big complaints from some quarters about the numbers, the Office for National Statistics (ONS) pointed out that more than 30% were students and their dependents and many more were EU citizens coming back to work in the UK post-pandemic. New arrivals coming to work, and their dependents made up 36%.
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GBP: Weekly gains for the pound
Sterling gained half a per cent on the euro in early trading yesterday, and while that was pared back in the afternoon GBP/EUR is some 0.75% up on the week and twice that amount against the US dollar.
After a hectic two weeks of data and economic policy announcements, there is next to nothing on the calendar for next week on the GBP side of the equation.
GBP/USD: the past year
EUR: Steady euro ahead of German business climate
A quiet day of trading left the single currency becalmed. However, there were modest gains on most currencies, and EUR/USD stretched its gain close to 3% for the month.
After a host of PMI data yesterday and German GDP this morning, several members of the European Central Bank’s (ECB’s) interest-rate setting committee will be speaking today, including Christine Lagarde.
USD: Spotlight on PMI results
With the USA closed for Thanksgiving, the dollar remained broadly stable.
Later today there will be a reading for Services and Manufacturing PMI, which is expected to remain at 50 or thereabouts for both.
Early next week will feature some housing data.
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