Sterling rebounded yesterday to give the currency some much needed relief after continued pressure against both EUR & USD most notably over the past 8 weeks. Septembers PMI Survey for the economy came out considerably higher than first estimates suggested, touching 48.5 against forecasts of 46.8. The underwhelming first estimates was one of the reasons for The Bank of England opting to keep Interest Rates on hold a few weeks back. However, it should be noted that surveys elsewhere are widely encouraging, mainly with consumer confidence currently at a 20-month high, due to rising wages and falling household energy bills. Business confidence is also closing in on an 18-month high, slowly diminishing the possibility of an economic recession.
The ONS have also raised previous GDP estimates for the economy which shows it is now well above Pre-Covid levels. Last week’s upward revision for UK GDP data has provided optimism that the Bank of England will deliver an additional Interest Rate hike, with market expectations now floating back around the 5.5% level for the rate peak. In the event of another hike taking place, Sterling would be supported considering it would push back against expectations for rate cuts in 2024.
One reason for the pullback in USD against both EUR & GBP was due to the disappointing figures released for ADP Employment Change in September which measures the level of Non-Farm Private payroll. Expectations had suggested an increase of 27,000 jobs however there was a drop in figures of 64,000 jobs. This paves the way for the Non-Farm payrolls tomorrow which is one of the most influential pieces of data, affecting not just The US Dollar but also the stock and bond markets. Expectations suggest a drop of 17,000 but this release is always extremely volatile and will no doubt be reflected within the markets.
For the rest of today, we have a basket of data across Europe & America. Starting off with Consumer Confidence in Spain, as well as the weekly jobs data in The US.