06/04/2017 - UK Services Sector Posts Solid Gains in March 

GBP

The Pound strengthened yesterday morning after the UK services sector rebounded in March, with business activity and incoming new work both rising at the strongest rates so far in 2017. Services Purchasing Managers' Index (PMI) also rose to a three-month high of 55.0 in March from 53.3 in February, beating forecasts of a reading of 53.5.

Markit revealed that bosses who were interviewed for the survey said they are optimistic about prospects over the next year. However, some companies said that “Brexit-related uncertainty” was holding back investment decisions. But on the upside, some firms are seeing more demand from abroad thanks to the weak pound.

Also in the news was reports that UK Car sales recorded its strongest month ever after car registrations surged by 8.4% year-on-year in March.

USD

Federal Reserve policymakers think the central bank should take steps to begin trimming its $4.5 trillion balance sheet later this year as long as the economic data holds up, minutes from their last meeting showed. Almost all policymakers agreed that the timing of a change in balance sheet policy would depend on economic and financial conditions and generally preferred to taper or stop investments in both Treasury and mortgage-backed bonds. The Fed bought Treasury and mortgage-backed bonds on an unprecedented scale in the wake of the financial crisis to help keep interest rates low to spur hiring and growth and they are seeking to reduce or unwind these positions.

The non-farm payrolls estimate (ADP) figure forecasts US companies to have added 263,000 workers in March, the most since December 2014. Analysts believe strong job gains in the coming months will likely add upward pressure on wages, supporting the Federal Reserve's view for at least two more interest rate increases by the end of 2017. The ADP figures come ahead of the comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.

Economists think we may see faster wage gains due to the uncertainty on immigration policy. Stricter immigration as proposed by the Trump administration would reduce labour supply, forcing employers to compete for workers.

Key Announcements

13:30 – USD :Unemployment claims are expected to fall to 251k