UK manufacturing PMI data came out roughly as expected at 55.2 compared to 55.3 which was forecast. This confirmed that factory activity in the UK grew by its fastest pace in over 6 years although from a lower benchmark level. With millions of pupils returning to school, the market has focused on the positive impact that parents returning to work will have on the economy which has kept the Pound strong against both the Euro and Dollar. Bank of England Governor Bailey will be speaking at 2pm which will be closely watched by the market.
Yesterday, Italian and French manufacturing PMI figures surprised the market whilst the same set of numbers from Germany came in below expectations. The market chose to focus on Europe’s largest economy which led to the Euro weakening against the Pound. In addition, Eurozone consumer price inflation flash estimates both were released below analysts’ forecasts. Overall, the Euro remains strong against a weaker Dollar but is struggling against a Pound that has seen some renewed strength as of late.
Last week’s announcement from Federal Reserve Chairman Powell that the central bank will keep interest rate lower for longer has continued to have a negative impact on the Dollar, which has weakened against both the Euro and Pound. Several FOMC members will be speaking today which could further weaken the greenback if they reiterate the Federal Reserve’s stance on interest rate levels. ADP non-farm employment change is due at 1:15pm which may cause some short-term volatility.