Sterling drifted upwards yesterday against the US dollar after some disappointing industrial results seemed to reflect growing business worries in the world’s biggest economy.
GBP/USD came close – but no cigar – to breaking another three-year high. GBP/EUR drifted downwards but remains 1% stronger than a month ago.
Final Services PMI results for the UK were heading upwards to 50.9 and managed to pass US ISM Services PMI and German Services PMI on the way down to 49.9 and 47.1 respectively.
There were some positives for European business, however, with Spanish and Italian Services PMI all in positive territory above 50.
The European Central Bank (ECB) looks likely to cut interest rates to 2% today, after inflation fell below the target rate. That would make the main eurozone interest rate less than half that of the UK and USA. While Donald Trump has called on the US Federal Reserve to cut rates at its meeting in two weeks – following the ADP jobs report that showed private firms hiring new employees at the lowest rate for two years – there remain clear inflationary pressures which the Fed looks unlikely to ignore. The Bank of England governor Andrew Bailey made the same point about UK interest rates on Tuesday.
In economic news yesterday, the Chancellor of the Exchequer promised £15bn extra spending on transport infrastructure outside London in the Midlands, North and West Country. Today a bill will be presented to parliament aiming to boost pension savings and force pension schemes to invest more in Britain. And talks will continue between the US and UK aimed at removing tariffs on UK cars and steel exports to the US.
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