Will Sterling perform again?

By Simon Eastman

As September starts and the week closes, we have seen Raheem Sterling and the England football team perform strongly against Hungary last night, whilst GBP sterling is very much on the back foot, struggling to make headway and trading within a fairly tight range.

To be fair, we’ve had little data to assist a sterling bounce, plus a short week with the Bank Holiday on Monday so its looking unlikely we will make much headway given another day of no key UK data. We just have Markit services PMI this morning ahead of the main event, the US non-farm payroll which comes after lunch. With the worlds biggest economy, it’s a clear insight into how that is fairing providing a record of all the new jobs produced. A large number is clearly a good thing showing a healthy economy, so if the numbers miss expectations, we can see cable and EUR/USD move wildly. The expectation is a big number but a drop from last month, so there is scope for some volatility.

Before this, we have EU Markit services PMI, PMI composite and retail sales. Should the retail sales miss the forecasted 55.5 for the month, it could provide some euro weakness and some buying opportunities for anyone looking to buy up the single currency. Poor retail sales was a key driver in the big drop the pound saw, but of course a better than expected figure could lead to some euro strength.

As well as the non-farm payrolls jobs figure, the US also releases unemployment rates, average earnings data, Markit services PMI, PMI composite, ISM service PMI and the ISM employment index. The ISM is the Institute for Supply Management and these readings give an overview to the non-manufacturing sector although it has less impact on GDP than the manufacturing sector readings. Anything above 50 shows growth and below 50 shows contraction, which would lead to a weaker dollar.

A day of non UK releases so a chance for sterling to benefit (or not) depending on the results and which way the USD/EUR see saw sways. As such, if you have a currency transfer to make in the coming weeks, it would be prudent to contact one of the team today for some friendly guidance on the options available to you to maximise your exchange.