GBP/EUR ended the week on a high note, climbing 0.5% on Friday to continue to recover from its recent eight-year low. German manufacturing PMI (which makes up 1/5 of the German economy) saw an unexpected downturn to dent the appeal of the Euro.
Markets were further discouraged by a report that the European Central Bank (ECB) sees a risk of its quantitative easing plans not being ‘fully ready’ before December. This suggests that the central bank is unlikely to begin the process of tapering its extensive quantitative easing program soon.
The UK experience better than expected Manufacturing PMI which helped boost the pound.
Sterling has been pretty much unchanged this week against the Dollar, trading in the mid-1.29s all week.
The Pound looked likely to struggle against the US Dollar on Thursday following the conclusion of the latest round of Brexit talks between the UK and EU, as EU’s chief Brexit negotiator Michel Barnier felt that no ‘decisive progress’ had been made during negotiations.
Weak US Non-farm payroll reports however helped counter weak GBP news however with both pieces of news cancelling each other out.
While US trade and PMI data will be published later in the week, the GBP/USD exchange rate is likely to be influenced by Britain’s services PMI first.
Markit will publish its August services PMI for Britain on Tuesday, which will give investors an idea of how Britain’s economy performed last month.
Tuesday: RBA Rate statement and interest rate decision – AUD
Wednesday: BOC rate statement and interest rate decision – CAD
Thursday: ECB interest rate decision – EUR