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Pound Euro Exchange Rate Hits Three-Week High Following Stellar UK Services PMI

Pound (GBP) Jumps on Strong Services PMI

The Pound (GBP) advanced through yesterday’s session, with the UK’s finalised services PMI for May reporting the strongest services sector growth in 24 years, causing the GBP/EUR exchange rate to climb to a three-week high.

However, GBP gains were capped by concerns over rising cases of coronavirus in the UK, despite Boris Johnson’s recent comments that there is no data as of yet to delay the ending of restrictions in the UK.

With data releases thin on the ground today, coronavirus news could be a key driver of movement for Sterling, with negative headlines possibly weighing on the Pound.

Euro (EUR) Dives amid US Dollar Demand

The Euro (EUR) dipped yesterday, dragged down by its negative correlation with the US Dollar (USD) following strong economic data releases from the US.

However, the Eurozone’s finalised services PMI limited these losses somewhat, as they showed that growth in the services sector in the bloc had reached its highest level since June 2018.

Looking ahead, the Euro could remain on the defensive today as the latest retail sales figures from the Eurozone showed a larger-than-expected 3.1% contraction in consumer spending, lower than the -1.2% forecast.

EUR investors will also be looking to a speech from European Central Bank President Christine Lagarde to see if she affirms her dovish bias.

US Dollar (USD) Climbs on Impressive Data

The US Dollar jumped yesterday following the release of the ISM non-manufacturing PMI for May, which showed a new record high for growth in the US services sector.

The ‘Greenback’ was also boosted by impressive employment data, with a fall in jobless claims and the ADP’s jobs report smashing expectations by printing 50% above the forecast figures.

Turning to today, this afternoon’s payroll release could provide more support for the US Dollar if it reinforces yesterday’s data showing that the US labour market is improving.

USD investors will also be watching the upcoming speech from Federal Reserve Chair Jerome Powell for any hints that the Fed may consider starting to taper its bond purchases, especially after such strong data releases.

Canadian Dollar (CAD) Wavers despite Strong Oil Prices

The Canadian Dollar (CAD) fluctuated yesterday, with the oil-sensitive ‘Loonie’ losing ground against the US Dollar despite a continued rise in WTI crude prices.

Looking ahead, today CAD could be dented by Canada’s latest jobs figures if they show that unemployment continued to climb in May. However, Canada’s Ivey PMI for last month is forecast to show a pickup in economic growth, which may help offset any downside.

Australian Dollar (AUD) Slides as Market Sentiment Sours

The Australian Dollar (AUD) was under pressure overnight, after a prevailing risk-off sentiment and strong US Dollar caused the ‘Aussie’ to slump, with AUD/GBP exchange rates hitting an eight-month low.

New Zealand Dollar (NZD) Dips in Risk-Off Trade

The New Zealand Dollar (NZD) was also down in overnight trade, with the risk-sensitive currency suffering from a bearish market mood.