Carney’s hawkish tone strengthens sterling

6th March 2019 Market Update

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?? GBP - Services PMI came in above expectations yesterday which gave the pound a slight boost following monday’s worse than expected construction PMI. Following on from this, Mark Carney spoke yesterday afternoon and stated that there was a “degree of slack” opening in the UK economy. He also went on to say that the market’s expectations for future interest rate rises may not be “high enough”, allowing sterling to rise further.

MPC members Cunliffe and Saunders are speaking today, and that is only thing of note out from the UK.

?? EUR - Services PMI came out from across Europe yesterday. This came in above expectations at 52.8, and across the board the figures were positive. This had a marginal impact on the euro though. There is no data of note from the eurozone today.

?? USD - ISM non-manufacturing PMI came in above expectations yesterday. Today we have the ADP non-farm employment change, which is forecast by the market to drop below the previous reading. This will act as a precursor for this Friday’s jobs figures (non-farm employment change) which will be regarded by the market as arguably the most important piece of data this week.

Summary:
GBP: Carney appears more hawkish than the market
EUR: Services PMI exceeds the market expectations across the board
USD: ADP non-farm employment figures act as a precursor for Friday’s jobs figures

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