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Sterling Rises as Manufacturing Output Jumps to 10 Month High

Published: 21 Feb at 1 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, Japan,

Pound Sterling (GBP) Rallies on Upbeat PMI Figures

The Pound (GBP) was able to edge higher against a handful of currencies after upbeat UK PMI data showed the UK’s private sector saw its joint-fastest private sector output since September 2018.

Added to this, the manufacturing sector saw the fastest growth in output since April 2019, providing Sterling with a further boost. Sterling traded higher despite many analysts stating the PMI figure is a false positive.

Looking ahead, GBP could give up some losses as traders look to the start of trade talks between the UK and European Union. Negotiations are expected to begin at the start of next month, and if markets are cautious about this, Sterling sentiment could slide.

Pound Euro (GBP/EUR) Exchange Rate Muted despite Upbeat Eurozone PMI

The Euro (EUR) remained largely flat against the Pound (GBP) on Friday after PMI data showed the Germany economy experienced moderate growth this month.

Added to this, the pairing was left flat after flash Eurozone PMIs revealed growth in the bloc was higher than expected despite Covid-19 fears.

Looking ahead, the single currency could suffer some losses following the release of further German data. If February's business sentiment data slumps further than expected, EUR will slide.

Pound US Dollar (GBP/USD) Exchange Rate Rises Ahead of US PMI Data

The Pound US Dollar (GBP/USD) exchange rate rallied after upbeat UK PMI data, offsetting earlier gains after investors flocked to the safe-haven Dollar.

The Dollar was able to make significant gains, especially against the Japanese Yen (JPY) and according to Saxo Bank’s head of FX strategy John Hardy:

‘The question is whether recent Dollar/Yen spike higher could be a one-off move triggered by order flows and algorithm trading or whether it is something else. This is a very interesting test of whether we are seeing regime change.’

Looking ahead, upbeat US PMI data this afternoon could provide the ‘Greenback’ with an upswing of support. If both the manufacturing and service sector growth increases more than expected, the Dollar will rise.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges Higher on Weaker Oil Prices

The Pound (GBP) rose against the Canadian Dollar (CAD) after oil prices fell at the end of this week’s session. A rise in new Covid-19 cases and weak Asian economic data increased uncertainty about the economic outlook and weighed on demand.

Despite the increase in uncertainty, major crude producers were in no rush to make cuts, sending oil prices lower. This followed Thursday’s slight rise following a smaller-than-expected rise in US crude stocks.

Looking ahead, the ‘Loonie’ could edge higher on Monday following the release of December’s Canadian wholesales sales. If sales rebound more than expected, CAD will rise.

Pound Australian Dollar (GBP/AUD) Exchange Rate Jumps on RBA Rate Cut Fears

The Australian Dollar (AUD) continued to slide against the Pound (GBP) as weak unemployment data increased the chance of a Reserve Bank of Australia (RBA) interest rate cut. Against the US Dollar, the ‘Aussie’ slumped to an 11 year low.

Meanwhile, AUD continued to slide after weak PMI data showed the Australian services sector slumped back below the no-change 50 mark.

Looking ahead, the ‘Aussie’ could continue to slide as RBA rate cut fears and the spread of coronavirus weighs on the currency.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Risk-Off Mood Continues

The Pound New Zealand Dollar (GBP/NZD) exchange rate traded higher on Friday, buoyed by strong UK PMI data and a risk-off mood.

Uncertainty about the spread of the virus weighed on NZD as more than 2,200 people had died due to the outbreak.

Looking ahead, the ‘Kiwi’ could make gains early next week following the release of upbeat retail sales data. If sales jump higher than expected in the final three months of 2019, NZD will edge higher.

As of Friday, 21st February 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.195, GBP USD exchange rate was 1.2961, GBP AUD exchange rate was 1.9556, GBP NZD exchange rate was 2.0415, GBP CAD exchange rate was 1.7141, and GBP JPY exchange rate was 144.6253.
Dominic Lee About Author: (474 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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