Despite a disappointing Retail Sales release early on Friday morning, Sterling traded well given the adverse market conditions. Market sentiment is becoming increasingly depressed as investors worry about the rising number of global COVID-19 infections. After recording 37,314 new COVID-19 cases on Friday, the UK recorded a further 32,058 on Saturday, and 32,253 on Sunday. The focus for Sterling today will be August’s Markit/CIPS Flash PMI’s at 09:30.
At 08:30 Germany released their latest Flash PMI numbers. Sadly for the Germany economy, both Composite and Manufacturing surveys missed expectations. Markit Composite PMI was forecasted at 62.2 but came in at 60.6. Manufacturing PMI missed expectations by 2.3, giving an actual reading of 62.7. One positive, Markit Services PMI exceed forecasts by 0.5, coming in at 61.5.
Eurozone Flash PMI’s also came in under forecast this morning. The Eurozone forecasted Composite PMI at 59.7 and Manufacturing at 62. Both readings disappointed, with Composite coming out at 59.7 and Manufacturing at 61.5. While these readings are below forecast, they indicate Eurozone “business activity remained strong this month… as a rapid vaccination drive against the coronavirus allowed more businesses to reopen and customers to venture out”. Chris Williamson, Chief Business Economist at IHS Markit, stated that “the Eurozone's economic recovery retained impressive momentum in August, with the PMI dipping only slightly from July's recent high to put its average in the third quarter so far at the highest for 21 years”.
Cable showed impressive resilience on Friday to maintain it’s form and not expose itself to downside pressures. GBPUSD opened the day at 1.3630 and dropped only slightly by the close, finishing the week at 1.3613.
GBPEUR also made a minor loss on Friday. After opened the session at 1.1664 the pair went on close the week at 1.1657.
EURUSD also made a subtle loss to close the week. The pair opened the day at 1.1686 and closed at 1.1678.