By Connor Campbell, Financial Analyst, Spreadex
A better than forecast services figure helped the pound to a fresh high and lifted the FTSE out of the red this Thursday.
Though the services PMI didn’t diverge from expectations as much as its manufacturing and construction peers did earlier in the week, the pound was still pleased the figure rose from 53.4 to 53.8 month-on-month. Sterling rode the PMI to a fresh 11 month high against the dollar, climbing 0.2% to graze $1.325, while jumping 0.3% against the euro (where it’s stuck in a holding pattern around the 89.5 cent mark). The pound conveniently didn’t pay much attention to the more negative aspects of the services update, with business expectations sinking to a level that may be ‘indicative of the economy stalling or even contracting’.
Of course the pound’s performance could drastically change dependant on what the Bank of England does at lunchtime. The June dip in inflation likely pushed any undecided MPC members in the direction of keeping rates as they are; more important in terms of sterling’s showing this afternoon, then, will be what the split is between doves and hawks (for reference last time out it was 5-3).
Elsewhere the Dow Jones looks set to open at 22000 once again this afternoon, though with little reason – at the moment – to significantly build on that level. The Markit and ISM services PMIs could help change its mind, though considering the former is expected to remain at 54.2, and the latter is set to dip from 57.4 to 56.9 month-on-month, maybe not.
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