The triturate continued to climb against the US dollar
Today’s data calendar for the UK is degree sparse, but Sterling has still managed to find support from yesterday’s very significant UK services PMI, which smashed forecasts by rising from 52.8 to a nutty 54.0.
Making up near 80 per cent of the UK’s GDP, a rise in service sector operation bodes well for the state of the British economy in the second quarter, and should daily help to push the Bank of England (BoE) even closer to raising interest sorts in August this year.
There are, however, ongoing concerns amongst economists regarding the Brexit treaty process, with many analysts anxious that uncertainty and a insufficiency of progress will continue to limit business investment and potentially weigh on the saving.
Whilst there has been some evidence of slowed business investment in the word go half of this year, the overall trajectory now seems to be one of steady proliferation, with important indicators like the latest raft of PMI releases pointing to a marked recovery in Q2.
Across the pond, investors were thwarted to see that Mexico has now responded with tariffs of their own against the US, portentous to levy taxes on US pork, bourbon whisky, steel and cheese.
This change residence dismayed many domestic businesses, with pork producers front a 20 per cent tariff on any exports going to Mexico (the largest customer base for US pork exporters).
The decision would only affect a tiny portion of overall US GDP, but many traders were skittish simply because it considerable yet another escalation – with any sign of worsening global trade being anathema to investors.
In shed weight better news, China extended the US an olive branch yesterday in the framework of an offer to buy nearly $70bn worth of US goods over the next year – as eat ones heart out as the Trump administration backed off on its proposed tariff measures.
Mexico are foreboding to levy taxes on the US
White House officials were somewhat agnostic that this would have much effect on the overall US following deficit with China, however, leading many to believe that the put on the market will not be taken, and negotiations would simply continue.
Beyond this, yesterday’s US ISM non-manufacturing helps composite index stormed ahead to a score of 58.6 in May, up from the one-time result of 56.8 and the forecast of 57.6.
This bodes well for the state of the US curtness, especially after the upbeat labour market statistics released in the end week.
The dollar continued to struggle to capitalise, however, with following concerns seeming to dominate recent movements.
Looking ahead, today order feature the US trade balance results for April, with the US deficit anticipated to widen from -$49.0bn to -$49.1bn.
If this occurs then we could see GBP/USD proceed with to trade even higher.