The Pound lost ground yesterday morning after British manufacturing growth slowed unexpectedly to its weakest rate in more than two years in June, dented by subdued export demand from Europe in the face of a strong pound,
The seasonally-adjusted Markit UK Manufacturing PMI was forecast to strengthen from 51.9 to 52.5, but the result dropped to 51.4 in June.
On a positive note the PMI survey reported that manufacturers took on staff at the fastest rate in three months during June, adding to positive trends in Britain's labour market.
Greece missed a repayment worth around 1.5 billion euros that was due to the International Monetary Fund (IMF) on Tuesday, making it the first advanced nation to ever default on a debt to the global financial stability agency. That followed months of contentious negotiations with its creditors over exchanging reforms for another bailout. The main concern with the Euro will be the outcome of Greece’s referendum on Sunday. Greek Prime minister Tsiparas says that Sunday’s referendum is not a choice between staying in or leaving the Eurozone and states that Greece remains willing to compromise and will respond to any positive results from the Eurogroup. He also stated that Greece has no choice but to let a referendum go ahead and let the people decide the outcome, stating a ‘no’ vote is necessary for a better outcome with creditors.
Yesterday we saw that there was a Eurogroup meeting. There are now currently no subsequent meetings currently scheduled before the referendum on Sunday. Economists suggest a Grexit would have a negative impact on the euro economy but not by a large amount, reducing growth by a potential 0.2-0.4%.
The US Dollar strengthened against many of its peers in response to the Greek crisis causing heightened demand for safe-haven assets. The appreciation has been slow moving, however, after Tuesday’s impressive confidence data was countered by a fall in business conditions.
June’s ISM Manufacturing index bettered estimates and rose to 53.5 in June from 52.8 in May, further strengthening the Dollar. The index is back to its January reading after slowing in March and April.
9:30 - GBP - PMI Construction (May) Expected to rise to 56.5 from 55.9
13:30 - USD -Non-farm employment change is forecast to fall to 231k from 280k
13:30 - USD - Unemployment Rate expected to fall to 5.4% from 5.5%
16:10 - EUR - ECB President Draghi speaks