Sterling weakens despite strong construction PMI figures

Published: 04 April, 2012

Sterling had a poor day yesterday weakening off against the majority of currencies, despite the release of strong construction PMI figures, which showed the fastest growth in 21 months.

Currency rates - April 4

EURO/GBP - 1.2042

US$/GBP - 1.5889

CHF/GBP - 1.4506

CAN$/GBP - 1.5762

AUS$/GBP - 1.5462

ZAR/GBP - 12.321

JPY/GBP - 131.44

HKD/GBP - 12.3374

NZD/GBP - 1.9474

SEK/GBP - 10.587

AED/GBP - 5.8332

US$/EURO - 1.3192

INR/GBP - 81.05

The British Chambers of Commerce stated its belief that the UK would avoid a technical recession; but, suggested the economic recovery is "much too slow" and it could be damaged further by the Eurozone crisis. Following the close of the UK market the minutes of the last US Federal Reserve meeting were released which resulted in sterling gaining ground against the euro and losing ground against the US$. Today we have the release of Services PMI data. It will be interesting to see if they mirror the positive data PMI data for manufacturing and construction.

The euro had a relatively strong day yesterday strengthening against sterling until losing ground at the end of the day and finishing fairly flat against the US dollar. Negative releases from Spain showed that unemployment was at the highest level for six years and the budget revealed that the debt-to-GDP ratio will rise to the highest level since 1990. The market will look towards the minimum bid rate decision today and the European Central Bank press conference that follows. The minimum bid rate is expected to remain at 1.00%.

The US dollar had a mixed day yesterday as data released showed that the number of factory orders had missed the markets expectations but strengthened when the Federal Reserve Bank minutes played down the likelihood of further quantitative easing. Unemployment data is released today ahead of the influential Non-Farm Payrolls figures which are due on Friday. Services PMI figures will also be announced today.

Elsewhere, the Royal Bank of Australia's decision to leave its cash rate at 4.25% caused a mass Australian dollar sell off with the currency weakening against all major counter parties. The Swiss Franc was one of the best performers yesterday, strengthening against the majority of currencies. Trade balance figures for Australia were released first thing this morning.

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