Sterling was boosted by data on Wednesday to record a 0.75% rise against the US dollar. It was a more topsy-turvy ride in GBP/EUR markets, but the pound still ended the day slightly up against its continental rival. The euro also fought back against the US dollar and ended two thirds of a per cent up.
S&P Global released its latest batch of UK PMI (Purchasing Managers’ Index) numbers yesterday, while Hamburg Commercial Bank did the same for Europe with its HCOB index. The numbers were even better than expected for the UK – both the services and manufacturing sectors reported a rise in activity at January’s first estimate.
There were a couple of nuances to the data: first and foremost, the crisis in the Red Sea has contributed to weak order books looking ahead, while supply chains have been greatly impacted by diverted shipping routes. Taken in sum though, it was a positive outcome and further testament of economic resilience.
The pound rose on the news, aided perhaps by comparison to the HCOB figures. Despite an uptick in activity, the eurozone’s metrics all sit below the UK’s. News that activity had picked up in German manufacturing will no doubt be a comfort to European observers, however.
The US also had PMI figures out via S&P Global. Once again, the data estimated activity had picked up in both manufacturing and services over the course of this month.
Markets have been a little starved of data this week and might be excused for reading too much into the numbers. That all changes today, however, with Germany’s Ifo business climate survey kicking off a busy day that features the European Central Bank’s (ECB) latest interest rate decision and a barrage of hard-hitting American reads.
As expected, the Bank of Canada opted to hold interest rates at 5% at yesterday’s meeting. The ECB is expected to follow suit today (with its interest rate at 4.5%), as policymakers look to stamp out the last stubborn embers of inflation.
The UK’s royal mail could soon move to a shorter work week in a bid to drive down costs. Regulator Ofcom said it could save £650mn per year if it switched to three days of postal service per week.
China’s central bank have announced a reduction in the volume of currency banks must hold in reserve. The surprise announcement will allow 1tn yuan (£110.8bn) to be released in the form of new loans, according to The Guardian.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
