A mixed day for sterling saw overnight gains against the euro eroded throughout the day despite the highest manufacturing Purchasing Managers’ index (PMI) reading seen for 8 months. After breaking back above the 1.38 level on Tuesday, sterling found itself under pressure against the euro, as manufacturing growth throughout the 18-nation bloc beat the consensus forecast. With this suggestion that the European Central Bank’s quantitative easing policy is starting to show positive effects, sterling fell away throughout the morning.
Sterling struggled in a similar fashion against the US dollar, ceding ground as investors looked to the relative safety provided by the US dollar. However, with both disappointing US non-farm employment figures and lower-than-expected ISM manufacturing PMI data released, sterling strengthened throughout the afternoon to finish the day marginally improved against the US dollar.
Today sees the release of February’s second set of PMI data, this time from the construction industry. With services growth data not released until after the Easter holiday, investors will be taking their cues on sterling strength from this data before locking in their positions over the break.