Sterling was among the most benefited currencies from broad dollar weakness on Monday. The pound has gained around a cent against the greenback and half a cent against the euro since Monday’s opening. Traders ignored mixed UK data on Monday, as the August Markit PMI came in just above expectations at 60.1, while the Services index missed forecasts at 55.5, well below July’s figures. UK manufacturers reported the worst stock shortages on record, caused in large part by a post-lockdown lack of components for the electronics industry according to a survey published on Monday. The survey published by the Confederation of British Industry (CBI), also showed expectations for output price growth over the next 3 months remained close to June’s nearly 30 year high, something the Bank of England will note after it said this month that it planned modest tightening of monetary policy.
EUR/USD has gained 0.5% since hitting a 9 month low last week. The Euro found support this morning after the release of German growth figures for the second quarter. The Unions largest economy expanded by 1.6% according to updated statistics, compared with the 1.5% which was originally reported.
The Dollar steadied in early trading following its sharpest one day fall since May on Monday. Traders responded yesterday to diminished chances that the Federal Reserve Bank would taper its bond buying scheme. Robert Kaplan, the Dallas head of the Federal Reserve Bank, announced at the weekend that he was wary of withdrawing stimulus having previously been in favour. The greenback fell more than 1% against the AUD, CAD, NOK and NZD .
1.30 pm EUR ECB member Schnabel speech
3.00 pm USD New home sales