Sterling was swimming against the tide yesterday despite an attempt at making some modest gains early in the day yesterday following construction data that showed the sector was seeing its strongest conditions since 2007. The narrowing of the Scottish referendum poll meant the pound was always going to face a considerable headwind and GBPUSD was also not helped by dollar strength following a strong manufacturing PMI from the US in the afternoon. One of the standout performers was USDJPY which spiked back above 105.00 briefly, an eight month high, before dipping back below and now sitting at 104.90.
This morning however the dollar is giving back a little ground with GBPUSD just off its lows at 1.6475 and EURUSD holding onto support trading at 1.3135. We’ve mentioned that some of the majors look a little oversold and so there’s a chance we could see a bear squeeze especially if we see good services PMIs this morning. Overnight we saw some decent Chinese services PMI data which is putting a spring in the step of equity markets and even Irish figures just released show the services sector there growing at its fastest rate for seven years. This will be the focus of trade today ahead of a very busy day tomorrow where not only do we get the ECB and BOE, on the geopolitical front the NATO summit gets underway in Wales. The Eurozone PMI figure is due to come in at 53.5, down on the July which was 54.2 and for the UK a figure of 58.5 is expected, down from 59.1.