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The pound gained against the US dollar yesterday
The pound had a positive day, maintaining its position within around 0.5% of an 18-month high against the euro and extending its 10-day run against the US dollar.
Indeed, at one point yesterday GBP/USD came close to a month-long high, before slipping back.
The cause of sterling’s bounce was a reading of 54.3 for the Purchasing Managers’ Index (PMI) in the UK’s all-important services sector. Analysts suggest that this would indicate the UK powering out of 2023’s recession to a 0.3% growth in the economy in the first quarter of 2024.
Anything over 50 denotes a positive viewpoint from business leaders, and in contrast Germany’s vital manufacturing PMI was a parlous 42.3 while America’s grew to 51.5 for manufacturing and fell to 51.3 for services.
In the US there was better news on employment, however, with initial jobless claims far below expectations at 201,000.
The UK’s good news on business optimism offers little hope of early interest rate drops for embattled home owners. Lenders have been raising mortgage rates in expectation of rates indeed staying “higher for longer”, which the Bank of England has been warning about for a while now.
A gloomy mood for the public was reflected in an unexpectedly low reading of -21 for GfK Consumer Confidence in the UK overnight. This was the first fall in four months.
On the stock market yesterday, tech shares were riding high, with US, European and Japanese markets all at all-time highs, and with the S&P 500 up 2.1% to a new record. The prompt was chipmaker Nvidia’s shares rising by 15% as the promise of AI boosted the tech sector.
In a blow to the City, however, pharmaceutical company Indivior has chosen to be listed in the US.
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GBP: Pound makes gains
Sterling made gains yesterday following the PMI reading, and remains up on the week against all but the Swedish and Norwegian currencies. Next week will be quiet for data.
GBP/USD past year
EUR: Poor PMI no problem for euro
The single currency shrugged off its biggest economy’s manufacturing woes and barely moved yesterday overall. However, over the course of the week it is up against most major currencies, including being 2.5% up on the Turkish lira.
We will shortly get a reading for Ifo Business Climate for Germany – will it be as poor as yesterday’s PMI? We will also hear from a brace of central bankers, including Isabel Schnabel.
EUR/USD past year
USD: Dollar losses mount
The dollar was the loser yesterday, despite the surge in tech stocks, taking weekly losses to some 0.4% against the euro, pound and Aussie dollar and three times that loss against the main Scandinavian currencies.
This was despite a better-than-expected weekly jobs report.
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USD/GBP past year
