Financial stability report to direct Pound
Daily Currency Update
Data from the UK on Tuesday showed that the service sector returned to growth in November, ending a three-month period of decline. The survey continued to report subdued demand and low confidence among clients and service providers still feeling the pinch of inflation. European services sector painted a different picture yesterday. Employment fell for the first time since January 2021, with the labour market succumbing to weakening demand conditions. The US also released its services PMI, and it came in better than expected. An above 50.0 reading at 52.7 shows growth within the sector with an increase in business activity. However, US Job openings missed forecast coming in at 8.73mio versus an expected 9.31mio. Both the Pound and the Euro are a little softer against the US Dollar, having been as low as 1.2580 and 1.0775 respectively. There has been a recovery in these currency pairs since. GBP/EUR is back up to recent highs, falling just short of breaking 1.1700 this morning.Key Movers
US jobs data holds the headlines for the region this week and later today we have non-farm employment change. An increase to the previous 113k is expected with 131k forecast. UK construction starts the day with a 9:30am release. The figure is due to remain in contraction, under the 50.0 gauge but see an uptick on the previous 45.6. Bank of England governor Bailey is due to hold a press conference about the Financial Stability Report, in London later this morning. Market participant eyes and ears will be glued to comments, especially as other central banks have been indicating interest rate cuts as soon as next year. To close the day, Bank of Canada are due to decide on their interest rates. No change expected at 5.00% but will the narrative change to holding interest rates rather than cutting as we go into 2024.All-in-all, it should be a volatile day for the Pound and worth monitoring the outcome of the releases mentioned as it will likely dictate Sterling movement into next week.
Expected Ranges
- GBP/USD: 1.2540 - 1.2720 ▲
- GBP/EUR: 1.1580 - 1.1690 ▲
- GBP/AUD: 1.9040 - 1.9290 ▲
- EUR/USD: 1.0750 - 1.0850 ▲