Trifecta! Pound Data Scores Another Upside Surprise

Last updated 4/3/2009 5:01 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

UK PMI Services report improved markedly rising to 45.6 versus 43.2 the period prior and 43.6 consensus call. The upside surprise in the PMI Services report caps a good week for UK economic data with PMI Manufacturing and PMI Construction releases improving as well. The news provides the strongest evidence to date that the contraction in UK economic activity may have finally leveled off, although all three gauges remain below the key 50 boom/bust line.

If today’s economic data represents a turning point in the UK economy, it may foreshadow an improvement in US demand as well. As the most financially sensitive of the G-4 economies UK was the first to plunge into a recession following the onset of the global credit crunch and may indeed be the first to revive. In that sense the smaller but similar UK economy could be acting as a canary in the coal mine to its much larger Anglo-Saxon cousin.

Cable was the prime beneficiary of the news rising through the 1.4800 barrier and hitting fresh session highs against the yen, the euro and the Swissie following the news. Should US NFP prove less damaging than the market fears and risk appetite remain strong into the weekend, the pound rally could continue with 1.4900 the next target of the longs.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.