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Further signs that the worst of the recession may be coming to an end sooner than originally thought buoyed equity markets and other risky assets in yesterday’s trade. GBP/USD moved to a high of 1.6664, a level not seen since October of last year as the need for the safety of US treasury debt waned in the eyes of investors. GBP also made ground against the European single currency as Eurozone unemployment rocketed to the highest level in a decade.

GBP was set off on the right course by construction PMI which printed the highest figure since November 2007, the last month before the index dipped below 50.0. A jump from an April figure of 33.7 to a May release of 48.5, a record jump in itself, was led by the housing sector as supposed to the commercial and civil engineering components.  With 2 good PMIs behind it, manufacturing on Monday was also strong, expectations on the services sector are high; the hope is that we will see a figure of 49.5, a minor contraction that is almost no difference. Think of the services sector like an oak tree; the 0.5 contraction signifies that a leaf has fallen off but the overall position is basically the same. Were we to print above 50.0, expansionary territory, we would be only the 4th country to achieve that this year and the first outside of Asia: Singapore managed to yesterday while the Chinese have managed 2 consecutive reading above the magical 50.0 level in recent months as have Hong Kong.

It is not all milk and honey for GBP however as a report detailing the slowdown in lending to companies and households was released. This definitely counts as a boot that could trample any ‘green shoots’ that have sprung up over the past few weeks as in particular it shows that the QE program enacted by the Bank of England has had really had no effect yet.

Even without the potential for a yippy Services PMI today would have been a busy data day; the EU services PMI is due out at 09.00 BST which is closely followed by EU PPI at 10.00 and European GDP at the same time.  The crucial precursor to Non-Farm Payrolls, ADP employment change, is also out alongside ISM manufacturing and Factory Orders from the US.

World First’s Twitter page is up and running and we will be live ‘tweeting’ the impact of all these data releases and how they affect the markets. Click below for up-to-date news on all things currency. The address is http://twitter.com/World_First 

Please feel free to contact me jeremy.cook@worldfirst.com(jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange on 020 7801 9050 or ourPrivate Client Currency Exchange on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms..

To view any past or present currency blogs please click on the following link www.worldfirst.com/blog

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