As Britain returned to work after the annoyances of yesterday’s snow day market participants will find sterling in a worse position than when we left it on Friday.

The market obviously believes that sterling is not ready for its breakout party and marked it down heavily over the course of the trading day against both USD and EUR. Further dips are likely as the week progresses with the Bank of England rate decision Thursday lunchtime the main piece of sterling data this week.  

It was not all doom and gloom yesterday and those of a risky disposition had their cockles warmed by a better than expected manufacturing sector survey. The ISM for the US manufacturing sector rose to 35.9 from a three-decade low in December of 32.9. The figure obviously shows that the sector is still in contraction but moves closer to the 50 mark will allow risk appetite to increase and sterling to be marked up.

Data today is fairly quiet. Construction PMI is due to fall once again as the green shoots of recovery are still being stamped out by the jackboot of tight credit conditions. German retail sales fell unexpectedly this morning after unemployment rose in January, sterling has not been able to take advantage however and with a recovery expected in PPI sterling may spend a good portion of the day on the back foot.

Please feel free to contact me (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 Team on 020 7801 9050 or our Private Client Currency Exchange Team 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.

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