Published: 22/07/2022 By ECAPSterling failed to break through the 1.20 ceiling once more yesterday, despite a lack of US data this week and a considerably softer dollar. This morning has seen a host of data from the UK in the form of Retail sales and PMI figures, the former managed to surpass expectations marginally with a -0.1% reading vs the forecast -0.2% still showing a slowdown however in overall consumer sales. The PMI services data which is potentially the more important data, had more of a positive reading however, the data expected to post a figure of 52.9 actually came in at 53.3, showing a expansion in the sector which contributes to over 70% of the UK's GDP figure.
Yesterday saw the ECB surprise markets with a 50bps rate hike, the first hike since 2011. They did note some concerns over inflation in their meeting, citing that by making credit more expensive would plunge economies into recession in a bid to fight a rising inflation. There remains calls in the market that we may see a further hike at their next meeting, so investor eyes will be closely monitoring macroeconomic data from the eurozone to try and understand the likelihood of a further subsequent rate hike. Despite the quiet week on the data front from the US, we do have the PMI services data due this afternoon. Early forecasts suggest a reading largely in line with last months figure, so any variation of that may see the dollar react accordingly.