This week has been a mixed bag for sterling, losing ground against the US dollar but gaining against the euro. Starting the week on the back foot, Monday morning’s Markit manufacturing PMI for November posted a reading of 53.50 versus 53 exp. Consumer credit figures for October also came in better than predicted at £1.087B vs £0.950B exp.
This helped GBP gain from an opening price of 1.5615 to push above 1.5750 by the end of the dayon Monday. The US also posted higher than expected readings for their November Markit and ISM manufacturing PMI, however this did little to stunt sterling’s gains. The positive UK data, combined with lower than expected manufacturing PMI from Europe, saw GBP rise 0.75 cents against the euro.
By James Mills at UKForex, an international money transfer service
Little came from Federal Reserve Chairman Janet Yellen’s speech on Tuesday. However,Wednesday’s strong UK Markit service PMI, poor European retail sales and eurozone services PMI gave GBP/EUR a boost, trading above 1.276. The pound also gained further against the greenback following the US’s ADP employment change, which printed 13K lower than expected at 208K. Thursday’s BOE interest rate decision and asset purchase facility became a bit of a non-event, with no changes to either.
The big news instead came from ECB president Draghi, speaking at the ECB Monetary Policy press conference. He inferred the ECB was not fully committed to implementing a programme of quantitative easing at this time. It signalled a change to last month’s rhetoric in which markets believed one would be in place within a few months. As such, the euro saw strong gains against both its UK and US counterparts with EUR/USD gapping 1.25 cents higher to 1.2432 and GBP/EUR falling from 1.2740 to 1.2625.
Markets then awaited Friday’s European GDP figures and US non-farm payrolls. The morning GDP figures all came in at predicted levels, so little volatility was seen. However, the afternoon’s non-farm payrolls posted a rise to 321K against expectations for 230k. The big number saw cable fall below 1.5590 and EUR/USD under 1.2290.
Focus next week will be on UK manufacturing data. Details of the ECB’s LTRO are also released, or moreover details of how much the central bank will be lending to EU banks. Later in the week, US retail sales data is due – if this comes in strong it will only serve to support momentum in dollar bids, especially so following the hot US jobs data last week.
More: EUR/USD and GBP/USD both look bearish: Elliott Wave Analysis
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