A mixed day for sterling yesterday saw the currency reverse its recent losses suffered against the US dollar, while falling against the euro for the fifth day running.
The Construction Purchase Managers’ Index (PMI) data was better than forecast, continuing the positive growth seen over the last two years. This better-than-expected data saw sterling make modest gains throughout the morning – although the positive news flow from the Eurozone proved to be the main catalyst for movement throughout the day: renewed optimism over the Greek negotiations and positive Eurozone inflation data saw sterling fall significantly against a resurgent euro.
Against the US dollar sterling was able to stop the recent rot and push higher and end the day at the highest level since the middle of last week. Negative US data and sentiment was the main driver for sterling’s gains.
Today will see the release of May’s final PMI data as we hear from the services industry. Although this data can often be very influential, as services make up 70% of the UK economy, we expect further news from the Greek debt negotiations to be the main driver of significant market movements.