Currency market updates - from Foreign Currency Direct (www.currencies.co.uk)

Wednesday 5th September 2007

By Alastair Archbold - Senior Executive Dealer

Overview of Trading Yesterday
GBP to USD - 0.25% (Still close to 26 year high (8% gain over last 12 months))
GBP to EUR - 0.16% (Close to 1 month high)
GBP to CYP – 0.15% (Close to 1 month high)

Today’s Data
08:55 German Services PMI
09:00 European Services PMI
09:30 UK Services PMI

So what is PMI?
The PMI is a composite index that is based on five major indicators including: new orders, inventory levels, production, supplier deliveries, and the employment environment. Each indicator has a different weight and the data is adjusted for seasonal factors. The Association of Purchasing Managers surveys over 300 purchasing managers nationwide who represent 20 different industries.

A PMI index over 50 indicates that manufacturing is expanding while anything below 50 means that the industry is contracting. Look out for this today.

It is important for the currency markets, as it gives a good indication of the strengths of a country, or economic zones Economy.  Stay in touch with your account manager to keep abreast of any potential market fluctuations that this data may cause.

What other data is coming up?

Thursday
UK RICS (Royal Institute of Chartered Surveyors) Housing Data
12:00 BoE Interest Rate Decision
12:45 ECB Interest Rate Decision

Friday
US - Non Farm Payrolls

Interest Rate decisions

Most analysts agree that both the Bank of England and the European Central bank will both leave interest rates on hold tomorrow.  There was talk earlier this year of the BoE raising rates to at least 6%, although with recent inflation data, this is now unlikely.

Nothing is ever set in stone though, and there is the small chance of a rate hike already priced into the market.  If rates are indeed left on hold by the BoE, there is the possibility that the current levels could well drop.

Eurozone
Growth has halved in the 13-nation Eurozone between March and June 2007, following weaker investment.  The area's economy grew 2.5% on an annual basis, or 0.3% from to the previous quarter, official data showed.

Analysts said the slowdown - after an expansion of 0.7% in the first quarter - had been expected, and was set to be short-lived.  The data fuels the view that the European Central Bank (ECB) will leave interest rates unchanged this week. As mentioned above, the ECB is set to meet on Thursday, with the decision to be released at 12:45pm.