Morning Currency Bulletin : Manufacturing Data In US, Eurozone And UK Set To Shape GBP EUR And GBP USD Exchange Rates

Modified: Monday, 1 October 2012 09:01 BST - Written by John Cameron

STORY LINK Morning Currency Bulletin : Manufacturing Data In US, Eurozone And UK Set To Shape GBP EUR And GBP USD Exchange Rates

Today sees a heavy global data schedule herald the arrival of a new month in the currency markets, with the latest edition of PMI Manufacturing surveys in both the eurozone and the UK leading the way. With the European version of the closely-monitored bell-weather of national economic health expected to show that activity in the key sector of mainland Europe’s economy has continued to contract at the same pace as last month, the potential exists for a move against the euro to be triggered. Anything less than a reading of 46 would see the single currency start the week firmly on the back foot. Meanwhile, with analysts already factoring-in a drop from last month’s showing in the UK’s version of the same survey, there would appear to be less possibility of downside for Sterling. With the GBP EUR exchange rate having spent the majority of the past seven days hovering around the psychologically significant 1.2500 level, this morning’s dual releases may see the pair either stage a convincing push through to the 1.2600s, or conversely, to settle back down in the 1.2400s.

Meanwhile, this afternoon’s ISM Manufacturing data, due for release in the US at 1500hrs BST, is also set up to have an interesting effect on the Buck. Analysts believe that the figure will print at 50, following last month’s showing of 49.6. The slight uptick, if it comes to pass, would signify that America’s giant manufacturing sector has ceased contracting. The Greenback’s relationship with ostensibly ‘good’, (i.e. better than anticipated), data releases has been sullied in recent weeks, following the Fed’s open-ended commitment to further Quantitative Easing in the States was announced. Initially, the US central bank pegged QE3 at $40bn per calendar month. However, in announcing that the US’s asset purchase scheme was set to be ramped up once again, Fed Chairman Ben Bernanke suggested that the $40bn could be stepped up if US economic indicators warranted it. Where once ‘really bad’ domestic data releases were guaranteed to trigger a wave of safe-haven support for the Dollar, they are now seen as providing evidence that further QE is warranted, causing selling pressure on the USD. A print in the mid-to-low 40s for this afternoon’s ISM survey could therefore see the GBP USD exchange rate power through to a new 13-month high in the 1.63s.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts