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GBP Slides in Value after UK Construction Slows in June

Published: 4 Jul at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)

A pair of disappointing UK activity measures have weakened the Pound this week, causing tight trading against the Euro and a decline against the US Dollar.

As well as Monday showing a dip in UK manufacturing, Tuesday has seen the construction PMI for June also decline. Neither sector has fallen into contraction, but this has nonetheless been seen as a symptom of ongoing economic uncertainty.

The UK’s current run of bad luck could be rounded off on Wednesday when the composite and services PMIs are announced. Both are forecast to show falling figures, though not to the sub-50 contraction range.

Euro (EUR)

Following comments from a European Central Bank (ECB) official, the Euro has traded down against the Pound and US Dollar today.

Speaking in Rome, the ECB’s Peter Praet has stated that the central bank’s mission ‘is not yet accomplished’.

While optimistic about the future growth of the Eurozone, Praet has added that there is still a long way to go before any decisive policy tightening is performed.

Other news has seen Spanish unemployment fall by less than forecast in June, which has also failed to give the Euro a lift.

Wednesday’s ECB stats will cover services and composite PMIs for June, along with retail sales for May. The Euro’s recent losses could expand if forecasts prove accurate, as both PMIs are expected to fall while a slowdown in annual sales is also predicted.

US Dollar (USD)

Today is Independence Day in the US, which means stock markets and economic announcements are effectively frozen.

Despite this handicap, however, the US Dollar has been steadily appreciating against the Pound and Euro.

These advances come in response to Monday’s ISM manufacturing PMI.

This showed a rise from 54.9 points to 57.8, which was an almost three-year high in ISM’s records.

When business resumes on Wednesday, the main data to watch out for will be Federal Reserve minutes for June.

These may indicate if the Fed is planning to tighten monetary policy in the coming months, which could include a US Dollar-boosting rise in interest rates.

Australian Dollar (AUD)

The Australian Dollar has dropped sharply against the Pound, Euro and US Dollar today. This decline comes due to a more cautious-than-expected statement from the Reserve Bank of Australia (RBA).

The RBA had been forecast to issue a hawkish statement about monetary policy, potentially to the level of hinting at a 2017 interest rate hike.

Instead, the central bank largely delivered a cautious outlook, which has dashed hopes of seeing an RBA rate hike in the near-term.

The next big AU news will be Thursday’s trade balance results for May. Forecasts have been for a rise in the current trade surplus, which could be enough to set the Australian Dollar rising once again.

New Zealand Dollar (NZD)

The New Zealand Dollar has appreciated against the Pound, Euro and US Dollar today, although domestic data has been mixed.

The NZIER business confidence result for Q2 showed a slight rise, but a more recent dairy trade price index has shown a -0.4% drop in dairy prices.

With the week’s high-impact NZ data now out, the only other scheduled news will be Wednesday’s ANZ commodity price index. Measuring the price of NZ exports, this may trigger slight NZD appreciation if it shows rising prices that can benefit national exporters.

Canadian Dollar (CAD)

Global crude oil prices have consistently risen since June 21st, which has been a strongly supportive factor for the Canadian Dollar.

Domestic data hasn’t been so supportive, with the RBC manufacturing PMI showing a slowdown in growth during June.

Thursday and Friday will bring high-impact CA data, starting with trade balance stats in the former case. These are predicted to show a deficit expansion in May, which may weaken the Canadian Dollar’s value.

Friday’s figures will more closely cover jobs news in the country. The number of employed persons is expected to rise by 10k, but no change is forecast for the unemployment rate.
As of Tuesday, 4th July 2017, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1387, GBP USD exchange rate was 1.2928, GBP AUD exchange rate was 1.6992, GBP NZD exchange rate was 1.7742, and GBP CAD exchange rate was 1.6723.
Dominic Lee About Author: (372 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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