Pound (GBP) Suffers as UK Services PMI is Revised Down for March

Published: 7 Apr at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, France, Germany,

Pound (GBP)

The Pound (GBP) fell against the Euro (EUR) and the US Dollar (USD) today following the release of the latest UK Services PMI, which was revised down to 56.3.

However, the UK’s business activity has picked up, with the latest PMI signaling rebound last month.

Howard Archer, the Chief Economic Advisor to EY Item Club, commented on the report:

‘Encouraging news on UK economy as purchasing managers reported services activity improved markedly in March to return to clear growth despite continuing lockdown restrictions. Services PMI at 7-month high of 56.3 (but revised down from flash 56.8) in March from 49.5 in Feb.’

Nevertheless, UK markets are remaining somewhat cautious as the nation’s neighbour, the EU, is suffering from a third-wave of Covid-19.

As a result, Sterling traders are worried that the virus could, in Prime Minister Boris Johnson’s words, “wash up” in Britain in the weeks or months ahead.

Euro (EUR)

The Euro (EUR) struggled this week as Europe’s key economies – France and Germany – have been hit by a rising number of Covid-19 cases.

France has even entered a month-long lockdown as the number of cases threatens to overwhelm the nation’s hospitals.

Nonetheless, the single currency clawed back some of its losses following today’s publication of the latest Eurozone Composite PMI for March, which beat forecasts and rose to 53.2.

Chris Williamson, Chief Business Economist at IHS Markit said:

‘Eurozone business activity bounced back in March, returning to growth after four months of decline with an even stronger expansion than signaled by the forecast-beating ‘flash’ data.’

US Dollar (USD)

The US Dollar (USD) continued to head higher today owing to growing concerns over the global economy.

As a result, the safe-haven ‘Greenback’ has benefited as the outlook or such economies as the Eurozone remain largely uncertain due to a third outbreak of Covid-19 cases.

Added to this, the outlook for the US economy – the largest in the world – is looking increasingly optimistic, with investors expecting the economy to make a swift recovery as the nation continues to rollout Covid-19 vaccinations.

US Dollar (USD) traders are also looking ahead to today’s speech from President Joe Biden.

If Mr Biden reiterates his confidence in the US economy, then we could see the US Dollar exchange rate head higher.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) held relatively steady today as oil prices have shown signs of stabilising.

The oil-sensitive ‘Loonie’, however, is being propped up by growing confidence that the price of oil will increase in the months ahead.

Stephen Innes, chief global markets strategist at AXI, explains:

‘I still feel oil traders may find comfort-buying dips [in prices] knowing OPEC+ will closely monitor macro conditions via monthly meetings on the flip side of the coin. There should be little doubt the group will step in to put a floor on the oil price, [if] macro conditions deteriorate.’

Australian Dollar (AUD)

The Australian Dollar (AUD) fell today owing to a dip in global risk sentiment. As a result, demand for the risk-sensitive ‘Aussie’ has suffered.

Added to this, the latest Australian Services PMI underperformed in March.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) also weakened this week owing to increased strength in the US Dollar, which has limited demand for the ‘Kiwi’.

As of Wednesday, 7th April 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.157, GBP USD exchange rate was 1.3735, GBP AUD exchange rate was 1.8046, GBP NZD exchange rate was 1.9599, and GBP CAD exchange rate was 1.7329.

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