Sterling came under significant pressure yesterday as the UK Inflation data came out below forecast. The Office for National Statistics (ONS) noted that inflation dropped unexpectedly due to retailers cutting the prices of clothing and footwear in an attempt to move stock. While economists were expecting a figure of 0.8%, the actual number was disappointing at 0.4%. Also a surprise yesterday was the UK PMI figures, which saw the services sector outpace manufacturing in the month of March for the first time since the start of the COVID-19 pandemic. The UK Composite PMI figure rose to a seven-month high of 56.6 while the services sub-index rose to 56.8 (also a seven-month high), and the manufacturing index was able to reach a three-month high of 55.6. The Financial Times reported that “the expansion was driven by a surge in new orders, with service providers receiving advance bookings from consumers, while manufacturers cited advance orders from hospitality businesses and retailers preparing to reopen”.
After falling to the depths of 1.37, GBPEUR opened the Wednesday session weak at 1.3718. Cable was able to catch some very minor upside before the close but was unable to gain any real momentum. The pair closed at 1.3718.
GBPEUR also struggled on Wednesday, opening at 1.1576 and closing at 1.1599. Despite testing the 1.16 handle, the pair has been unable to sustain itself beyond that mark.
EURUSD experienced minor losses on Wednesday as a 4-month high Dollar pushed the rate lower. The pair started the day at 1.1846 and closed at 1.1830.
On the data front, it’s a busy day across the pond. At 12:30 US GDP Growth Rate will be released, expected at 4.1% with a previous of 33.4%. Then following this we have the weekly US Labour report.