Earlier today, upbeat data had helped to push the Pound higher, though analysts believe that it just a knee-jerk reaction. Markit reported that the UK’s January PMI for the construction sector was unexpectedly improved with a reading of 48.4 against an expected reading of 46.6; the previous reading was at 44.4. Yesterday, Markit had reported that the January PMI for the manufacturing sector was at the threshold of 50.0, above the flat 49.8 reading that analysts had predicted. The UK services sector PMI will be released tomorrow with economists expecting the reading to be unchanged at 52.9.
As of 11:17 am in London, the GBP/USD was trading at $1.3009, a gain of 0.1123%, and moving away from the earlier session trough of $1.29410. The EUR/GBP was at 0.8495 Pence, a loss of 0.1504%; the pair has ranged from a low of 0.84865 Pence to a high of 0.85837 Pence.
In general, the Pound Sterling continues to be under pressure as nervous jitters over the Brexit take hold. Sterling hit a 6-week trough versus the US Dollar on renewed concerns that no deal will be reachable before the end of the year, when the transition period concludes. Both the EU and the British government have vastly different outlooks for a future relationship and analysts are concerned that there will not be enough compromise on either side to carve out a workable trading relationship. The issue appears to be adherence to rules and regulations imposed by the EU leadership. The British Prime Minister has said Britain won’t be compelled to adhere to the primarily labor and environmental restrictions that the EU has laid down.