HiFX comments on the service sector data
Andy Scott, associate director of FX advisory services at foreign currency specialists, HiFX, comments on the service sector data.
“Sterling was given some respite on Wednesday following the release of much better than expected service sector data for April, bucking the trend of weaker manufacturing and construction activity. Sterling has faced fairly heavy selling pressure recently, having fallen by almost 3% against the dollar from 1.55 last week, and almost 4% against the euro from above 1.40.
“The uncertainty of the general election tomorrow and the disappointing first quarter GDP figures last week have certainly made sterling less attractive, particularly against a resurgent euro.
“The purchasing managers’ indexes for last month, appear to indicate that sterling’s strength against the euro is having a negative impact on the production of physical goods, which are less competitive on a global scale. However, services such as legal and accounting appear to be less price sensitive. The outlook for sterling remains positive although the election outcome could cause increased volatility in the short-term.
“We continue to look for it to strengthen against the U.S. dollar this year towards 1.60, whilst we feel it will now slightly underperform against the euro and will dip to 1.30.”
