Poor week for Sterling
- Posted by Shyam Gokani in Uncategorised
- May 6, 2016
- No Comments
The dollar slipped against a basket of currencies on Friday but stayed on track for weekly gains as investors readied for April’s U.S. non-farm payrolls report.
A survey showed economists expect U.S. payrolls to have risen by 202,000 in April after increasing by 215,000 in March. A weaker-than-expected report this week has tempered market expectations of a robust reading on Friday.
Polls recently point to a tight contest in the referendum, with several online surveys placing the vote to leave camp marginally ahead. To add to the unpredictability, the vote to stay remains substantially ahead in phone polling.
U.K. companies are feeling the strain from the upcoming European Union referendum, with a gauge of services falling to its lowest level in more than three years in April.
Purchasing Managers Index dropped to 52.3 from 53.7. While that’s above the 50 level that divides expansion from contraction, it’s the weakest since February 2013 and below the 53.5 median forecast of economists.
The slump follows bigger-than-expected declines in manufacturing and construction surveys earlier this week. The reports indicate growth of just 0.1 percent in April, down from 0.4 percent in the first quarter.
Bank of England officials have said they will interpret economic data around the referendum with caution. The nine-member Monetary Policy Committee will announce its next interest-rate decision and publish new forecasts on May 12.
The BOE has already said the build up to the June 23 vote is weighing on confidence and investment, and warned the impact could be more severe if the U.K. votes to leave the bloc in a so-called Brexit. PMI fell to the lowest in more than three years last month.
Some services companies said clients delayed new contracts because of the forthcoming referendum. Employment growth slowed in April and the outlook for activity was at its joint-weakest level in over three years, it said.
In a separate report Thursday, Moody’s said that uncertainty over the referendum had pushed up funding costs for British lenders this year and warned that global investment banks could “progressively downsize their U.K. activities” if Britain quits the EU.
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