August PMI data disappoints
The Pound is trading down by around half a cent against the majority of currencies today, as earlier UK PMI data failed to reach estimates. The readings show a less robust improvement in business activity in August and this may tamper with the future pace of the recovery. The concern is that the rebound may fade as quickly as it appeared, especially as the 'Eat out to help help out' scheme has now finished.
However, the figure does show that consumer demand is still high and the UK is way ahead of the Euro-Zone on this particular data. Germany was the only EU country to beat estimates, but overall are far behind the UK's figures (58.8-52.5). Italy is causing real concern for the Euro-Zone as their figures dip into contraction territory once again (47.1). There were also poor Euro-Zone retail sales figures for July, with a surprisingly sharp contraction.
£-€ rates have dropped 0.6% in 12-hours and the £-$ is down 2-cents since Tuesday. So a bit of a hit today for the Pound, but according to HSBC, this could be short term as far as £-€ rates go. Supposedly, the ECB are uncomfortable with the Euro's strength and will look to curtail it. This is because EU goods are currently expensive on the international market, causing an inflation issue and hindering the EU's recovery.
The USD has had a strong 48-hours, suggesting the end of its multi-month weakness of late. The market is eagerly awaiting the US unemployment rate and non-farm payrolls tomorrow, that are expected to be positive. The stock market has taken a downward turn today and has further helped the $ across the board.