The dollar slipped 0.3% against the euro on Tuesday, losing Monday’s gains. The pound held steady, marginally behind the euro and 0.2% up on the dollar, as traders await the Bank of England’s interest rate decision on Thursday.
The big news of the week is the Monetary Policy Committee’s decision on Thursday. While largely expected to cut interest rates, the rise we’ve seen in unemployment and inflation may cause the Bank’s group of economic experts to hold the rate steady, following the US Federal Reserve’s example.
New UK services data published yesterday which showed the biggest fall in orders in nearly three years. So not a positive backdrop for the next meeting of the MPC. Later today there will be a similar survey showing the state of the UK construction industry and it may provide more fodder for the Bank’s rate cutting division.
Over in the US, there were conflicting services reports from S&P and ISM. The former showed an unexpected rise in activity, while the latter showed a fall in July. With last week’s upset in job figures, where the Bureau of Labor revised its numbers down sharply, revealing a major slowdown in the US jobs market, further confusion may unsettle traders.
Services data in Europea revealed small rises in many countries, with only France reporting a fall. As in the UK, today sees the publication of construction data but, with no EU interest rate decisions until September 11, the data isn’t likely to have a major impact.
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.
