Markets are currently navigating a complex “wait-and-see” period, as traders balance the surge in geopolitical headlines versus critical macroeconomic data. The primary driver of recent volatility has still been the ongoing tension in the Middle East, we did see a sense of calm and relief following President Trump’s announcement of a five day reprieve regarding potential strikes on Iranian energy infrastructure. The USD did retreat from its recent highs. This view of a “de-escalation” has allowed more risk-sensitive currencies, like GBP to breath and shown signs of recovery from a three month low a couple of days ago. However, markets are still very unpredictable and will be affected of the next steps that unfolds in the Middle East.
Ahead of today we have PMI data for both Europe and UK. The European basket, including France and Germany was released earlier this morning with mixed signals. For both countries we could see that manufacturing PMI came out better than its forecast and previous reading, signalling a healthier forecast for the manufacturing sector for both countries. While manufacturing showed signs of positivity, this was somehow cancelled out with PMI services retreated for both France and Germany. In this morning session we will also have PMI figures released with forecasting suggesting a drop off for both manufacturing and services to its previous number. With the UK relying heavily on imports, the service sector will be in focus. Can services shown an early sign of resilience and dampen fears of future rising costs, to be align with BoE recent decision to hold rates on hold.
GBP/EUR 1.1548 GBP/USD 1.3379 GBP/AED 4.9173
GBP/AUD 1.9239 GBP/CHF 1.0529 GBP/CAD 1.8393
GBP/NZD 2.2999 EUR/USD 1.1574 GBP/ZAR 22.7261