The Pound has remained in a severely depleted state during trading today, continuing to be adversely affected by the weekend’s Article 50 announcement from Prime Minister Theresa May.
- Pound Sterling remains soft after Article 50 news – Conservative conference ongoing
- Euro fluctuates after Spanish unemployment rise – ECB’s Mersch warned of low-interest rate damage
- US Dollar positive after Trump tax debacle – Odds of December interest rate hike increase
- Major UK services PMI decline expected tomorrow – Key Eurozone and US PMIs also due
The Euro has risen against the Pound but fluctuated elsewhere on ECB comments, while the US Dollar has been a stable option for investors, having been bolstered by presidential election developments.
British Pound News: Historic Losses seen for GBP on Recurrent ‘Brexit’ Fears
The Pound has been in low demand against the Euro and US Dollar today, having remained at an over-three year low against the Euro at 1.14 and hit a 31-year low against the US Dollar at 1.27.
The source of this overwhelming negativity has been the announcement from PM May that Article 50 will be triggered at the end of March 2017 at the latest, which has put a clear timer in place before the UK enters what may well be a period of sustained economic volatility.
The latest UK domestic data has seen the second of three PMIs this week rise, with the construction result climbing from 49.2 to 52.3, a better result than expected; this follows on from Monday’s manufacturing PMI going up instead of down.
Commenting on the construction result was Markit Senior Economist Tim Moore, who stated that;
‘A number of survey respondents noted that Brexit-related anxiety has receded among clients, although it remained a factor behind the ongoing decline in commercial building work’.
Euro Mixed as Mersch Issues Warning, US Dollar Climbs along with Chances of December Fed Rate Hike
The Euro’s trading today has been uncertain, with a rise in Spanish unemployment coming alongside comments from European Central Bank (ECB) official Yves Mersch that prolonged low or negative interest rates in the Eurozone are likely to have a detrimental overall effect on the banking sector.
For the US Dollar, movements have been almost universally positive, thanks to the recent release of Donald Trump’s tax details raising questions about the morality of his past practices, which has increased the chances of a stable Democrat victory by extension.
Also aiding the ‘Buck’ has been the fact that the odds of a December Fed interest rate hike have been increasing exponentially, with the latest chances of a 0.25% December increase being placed at 55%.
Future GBP EUR USD Forecast: UK, Eurozone and US Services PMIs due Tomorrow
The near-term will see the announcement of UK, Eurozone and US services PMI results for September, which are due over Wednesday morning for the former two areas and over the afternoon for the latter.
Broadly speaking, a UK services drop is expected, though not to the contraction range.
For the Eurozone, an overall services increase is expected, from 52.1 to 52.8. With the US, a rise from 51 points to 51.9 is expected to occur.
Current GBP, EUR, USD Exchange Rates
The Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1431 and the Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8751 today.
The Pound US Dollar (GBP USD) exchange rate was trending in the region of 1.2748 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.7846 today.
The Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.1154 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.8967 today.