Pound Sterling to Australian Dollar (GBP/AUD) rallies on better than expected data
Sterling rallied on better than market data last night with Composite PMI coming in much better than expected with forecasts of a rise from 55.8 to 56.2.This was easily eclipsed with the actual reading coming in at 57.6. Purchasing Managers Index or PMI for short covers the service sector and accounts for up to 76% of UK GDP and 75% of all jobs in the UK. New businesses improved and lower fuel costs helped to counter balance rising wage bills.
The effect was immediate on the Pound, with a rally of a little over 1% enjoyed against most of the majors. GBPAUD is now sitting right at the top of the 2 month range at 1.86654, a level which has been visited twice before in the last 2 months with a selloff ensuing over the next few weeks. Whether this will be the case this time only time will tell, but if it does fall, this will bring the Feb/Jan 2014 high of 1.91.
This rally the Pound enjoyed last night could extend overnight when the Bank Of England (BOE) meets to decide where Interest Rates should be and then speak on both the health of the UK economy and the potential future direction of rates.
EUR/AUD- EUR/GBP Euro suffers losses due to the services sector hitting 11 month low.
In stark contrast, the services sector in the Euro Zone fell to a 11 month low with the services sector slowing down more than expected. Forecasts were for PMI to come in at 51.3, lower than the October reading of 52.3 , instead the actual reading was slightly lower coming in at 51.1 .This could force the hand of the ECB to change its policy, or at the very least change amp up their rhetoric when the interest rate decision is delivered by Mario Draghi tonight. Rates are expected to be held at 0.05% but it would not surprise the market if this is dropped into negative territory.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Softens as Stronger than expected ISM extends US Dollar rally
The U.S Dollar rallied strongly on the back of a strong reading from the non-manufacturing sector overnight which surveys more than 400 non manufacturing firms and covers more than 60 sectors across the U.S .The forecasted reading was for a rise from November of 57.1 to 57.5 .This was beaten by a country mile when the actual reading came in at 59.3 with the Australian Dollar (AUDUSD) hitting 4 year lows at 0.83900.