HiFX, comments on the recent PMI figures
Andy Scott, associate director of FX advisory services at foreign currency specialists, HiFX, comments on this morning’s PMI figures.
“The services sector saw a stronger than expected bounce back in activity growth in January, from a 17-month low in December, easing concerns that the economy was slowing sharply. This reading is always closely watched as it provides a fairly reliable indicator for overall GDP growth, which is currently tracking just above the fourth quarter’s 0.5% pace based on January’s reading.
“As we head towards the general election in May, the economy looks to be on a good footing with the employment element of the index signalling an impressive rate of job creation of approximately 70,000.
“Sterling pushed up against both the euro and the U.S. dollar to 1.3250 and 1.5190 respectively, following the release on Wednesday morning. However, it remains below its highest levels for 2015 against both currencies due to a slight recovery in the euro following the ECB announcing its larger than expected Q.E. programme, and with the U.S. dollar remaining strong on expectations the Fed will hike before the Bank of England this year.
“In the Eurozone, the services PMI picked up to a 6-month high in January, led by stronger readings from Germany, Italy and Spain. France was the only one of the four largest economies that saw activity contract again, as it continues to suffer from weakened economic confidence amongst its businesses and consumers. The weaker euro and dramatic fall in global oil prices are expected to provide a boost to economic activity alongside hopes that the ECB’s action will increase bank lending and encourage businesses to raise investment spending.”
