Sterling strengthened on Wednesday, despite Purchasing Managers’ Index (PMI) data from the construction industry pointing to a further slowdown in UK growth. Following a week of gains against the euro, sterling came under pressure throughout early trading, ahead of the release of these PMI construction industry figures. Despite this data falling short of expectations, sterling found strength from investor focus being trained on the announcement of services growth figures. Sterling continued to strengthen throughout the afternoon, hitting a one-week high against the US dollar and a two-week high versus the euro. With recent falls in sterling strength driven by movements of its major currency pairings and fears over the potential after effects of a Brexit from the EU, this recent recovery could be put down to a re-assessment of the feasible implications that exiting the EU would have on the UK economy.
Despite the breadth of the recovery seen by sterling this week, today’s PMI data from the services industry will be key to sustaining the current levels. Should we see another miss in the PMI figure, sterling could fall again.
Sterling is creeping back up against its major counterparts, but sudden rate movement is likely to continue over the coming months. Contact your trader for the latest rates and news of what currency risks are posed by the uncertain markets.