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The dollar slipped 0.3% against the euro on Tuesday, losing Monday’s gains. The pound held steady, marginally behind the euro and 0.2% up on the dollar, as traders await the Bank of England’s interest rate decision on Thursday.
The big news of the week is the Monetary Policy Committee’s decision on Thursday. While largely expected to cut interest rates, the rise we’ve seen in unemployment and inflation may cause the Bank’s group of economic experts to hold the rate steady, following the US Federal Reserve’s example.
New UK services data published yesterday which showed the biggest fall in orders in nearly three years. So not a positive backdrop for the next meeting of the MPC. Later today there will be a similar survey showing the state of the UK construction industry and it may provide more fodder for the Bank’s rate cutting division.
Over in the US, there were conflicting services reports from S&P and ISM. The former showed an unexpected rise in activity, while the latter showed a fall in July. With last week’s upset in job figures, where the Bureau of Labor revised its numbers down sharply, revealing a major slowdown in the US jobs market, further confusion may unsettle traders.
Services data in Europea revealed small rises in many countries, with only France reporting a fall. As in the UK, today sees the publication of construction data but, with no EU interest rate decisions until September 11, the data isn’t likely to have a major impact.
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GBP: Small gains ahead of MPC decision
The pound made small gains on the dollar ahead of tomorrow’s MPC interest rate decision, climbing 0.2%. Though it was still marginally behind the euro. The Bank is largely expected to cut interest rates, though fresh economic surveys paint a dismal picture for the UK services industry.
GBP/USD past year
EUR: Recovery from Monday’s poor performance
The euro was up 0.3% on the dollar, recovering from Monday’s losses. Fresh services data showed small gains across most of Europe, with only France registering a loss. Construction data coming later today is predicted to show similar.
EUR/USD past year
USD: Slight dips and confused data
The dollar dragged behind the pound and euro on Tuesday, losing 0.2% against the former and 0.3% against the latter. Two surveys of the country’s services industry painted a confused picture, with one showing growth and the other contraction.
USD/GBP past year
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