GBP/USD: Pound Hovers Around $1.29 Ahead of PMI’s

The pound was showing some resilience this morning after slipping lower versus the dollar every session this week. On Thursday the pound to US dollar exchange rate tumbled through US$1.29 to a fresh year to date low of US$1.2850. The pair closed the session down 0.3% at US$1.12895. Across the week so far, the pound has shed 1.2%, giving back last week’s gains.

GBP/USD is up 0.1% at 07:45 GMT as attention shifts to PMI data.

UK Manufacturing To Slip Back Into Contraction?

The pound has trended lower across this week despite upbeat macro-economic data beating analysts’ expectations. Average wages topped pre-financial crisis levels, inflation ticked closer to the Bank of England’s 2% target and yesterday’s data revealed that retail sales jumped 0.9% month on month in January. This was a substantial increase from December’s -0.8% decline.

Underlying retail sales, which strips out the impact of fuel also increased an impressive 1.6%, yet the pound still declined. This can be partly attributed to a weak outlook for retail sales. February’s wet weather and the coronavirus outbreak will almost certainly hit sales of those places frequented by Chinese tourists.

Brexit uncertainty is also weighing on demand for the pound. Investors fear the two sides won’t reach an agreed trade deal within the tight time frame.

The pound could edge lower again today as investors look towards PMI readings for the manufacturing sector and service sector. Analysts are expecting activity in the manufacturing sector to slip back into contraction after stagnating in January.

PMI’s To Reveal Impact Of Coronavirus?

The dollar ruled in the previous session, boosted by safe haven flows in a risk off session. With multiple companies warning over the potential impact of the coronavirus outbreak on revenues, and fears of coronavirus spreading rapidly across Asia, the dollar has remained strong.

Today dollar investors will look to February PMI data for clues over the health of the US economy. The coronavirus outbreak started grabbing the headlines in late January. The full extent of the crisis only became apparent in February. More companies, such as Apple have warned on revenue on the back of the spread of coronavirus. PMI’s are forward looking so could give an initial idea as to the impact that the virus is having on companies and economies.

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.</h6