Sterling price action remained choppy yesterday in the face of strong data from the UK services sector and continued uncertainty surrounding Brexit trade talks. The UK Services sector rebounded strongly in January, posting a reading of 53.9 versus initial expectations of 52.9; the highest level since October 2018. Sterling rallied over 0.6% on the news before falling heavily after reports suggested the EU were prepared to rewrite key Mifid II regulations which could undermine London’s position as a financial services hub. Traders are keeping a close eye on Boris Johnson and his team for clues as to what direction talks are likely to take, with analysts still sceptical that a deal can be agreed before the December 2020 deadline.
US Dollar Strength After Positive Economic Data Releases
Over the pond, the US Dollar strengthened across the board yesterday after a flurry of positive data from the docket including employment and ISM non-manufacturing numbers which confirmed the US economy is continuing to hold its own. The US’s non-farm sector added 291k jobs through January; the highest since March 2017, prompting widespread US Dollar buying. All eyes will be on the non-farm payroll numbers and unemployment rate from the States on tomorrow; a key measure of the US labour market and certainly a driver of monetary policy.
Today, traders will be taking note of unemployment claims from the States, as well as a speech from FOMC member Kaplan this afternoon.