Dollar advances against the pound

Foenix Partners

Foenix Partners

February started off in familiar fashion with the greenback advancing against sterling as a plethora of PMI prints came into play. The European open saw individual markit manufacturing PMI prints coming in mixed from the bloc state countries; Italy faring particularly well with Germany slipping slightly below expectations – balancing out to an overall eurozone print in line with forecasts at 51.0 for January. Shortly afterwards the UK led by example with its manufacturing PMI print showing an expansionary figure of 53.0, above forecasts of 52.6,exemplifying strong performance in the key sector of manufacturing. Given the recent miss in GDP last week, progression in such an integral part of the economy will be welcome news. Aside from data prints, numerous comments were found around Greece, with German finance minister Schaeuble noting that changes to the Greek bailout programme were not acceptable and that the Troika must continue to participate in the programme. He did however note that financial markets were not showing any signs of returning to volatility of proportion that was found during the EU crisis with the Greek bailout years ago. With the Greek negotiations starting to take place, the speed (of the assumed) agreement between Greece and the EU will be interesting, as a drawn out process could start to unnerve markets in weeks to come. With little else of note from Europe focus shifted across the Atlantic as ISM manufacturing PMI fell short of expectations for January, printing 53.5, below the 54.5 forecast. This miss perhaps wasn’t surprising given the loss in momentum in the manufacturing sector this year, but it is something that will noted if a continuation of the downtrend occurs.

Price action was choppy during Monday as the greenback advanced against the pound, seeing GBPUSD down towards the yearly lows but settling above the 1.5000 psychological mark for a large part of the day. The euro fared better making small gains against the dollar, sending GBPEUR back down to daily lows of 1.3217 – the lowest level for a little over a week. The day ahead proves a relatively quiet one, with the focus being a morning print of UK PMI construction (January), but little else to note aside from US factory orders mid afternoon.

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