By Lauren Buckner
Sterling was under pressure at the end of last week moving downward against both the euro and US dollar in early trading on Friday before interesting inflation and jobs data from the US prompted a recovery.
The Pound was sold off last week highlighting investor concerns around the UK economy and recession, as the USD gained momentum on the back of the Federal Reserves minutes suggesting interest rate rises would go further than previously expected in the States. This saw GBP/EUR testing recent lows as the Pound was impacted at a faster pace than the Euro. However, there is some respite from this drop this morning as markets react to poor PMI and wage growth data from the US at the end of last week.
US PMI releases measure economic growth (or decline) in both manufacturing and service sectors and is seen as an efficient and timely measure of economic performance. Service sector data dropped to its lowest level since May 2020 and manufacturing recorded over a 20 year low prompting a dollar sell off that Sterling capitalised on. Jobs data in the form of non-farms payroll compacted the moves as despite a strong headline figure of 223,000 jobs created in the US, wage levels have actually dropped and therefore the employment market is no longer at optimum health.
Sterling gains on the back of this data are very welcome and have seen the Pound move higher against the Euro, although still within the recent trading range. The next test for the Pound will be tomorrows retail sales release followed by construction, manufacturing and GDP at the end of the week. The markets focus on economic data continues.
Data releases this week;
Monday
EU unemployment rate
UK mortgage rate
US consumer inflation expectations
consumer credit charge
Tuesday
UK retail sales
US FED chair Powell speech
Wednesday
US 30 year mortgage rate
Mortgage market index
Thursday
US inflation rate YoY
Core inflation rate
Initial Jobless claims
CPI
Friday
UK GDP
Industrial production
Manufacturing production
EU industrial production