nvestors began squaring positions following a recent rapid recovery in the greenback that has seen the currency recover around 3% of its losses in a little under a month. With news out of both the Eurozone and US relatively light on the ground yesterday, currency traders instead turned their attention to developments in the coming days. This Friday’s nonfarm payrolls report will likely steal the limelight this week and is expected to show job creation in the US slowed fairly sharply in September following both Hurricane Harvey and Irma.

In the meantime, Federal Reserve Chair Janet Yellen and President of the European Central Bank Mario Draghi will both be speaking this evening. With the majority of the market coming around to the idea of higher interest rates in the US in December we instead await any hints from Draghi that the ECB could soon be ready to announce a tapering in its quantitative easing programme. The revised service PMI in the Eurozone this morning and the release of the ECB’s meeting accounts on Thursday caps a particularly busy week in the currency bloc.

Sterling steady after services PMI bounce

The Pound received a welcome boost from this morning’s services PMI, which suggested that the UK economy may not have slowed as much as first feared in the third quarter of the year. Sterling rose off a near three week high after the services PMI, the sector of which accounts for nearly 80% of overall activity in the UK, rose to 53.6 last month from a consensus of 53.2. This uptick in activity comes at a particularly welcome moment for the Bank of England which appears to be edging towards its first interest rate hike in a decade.

On Tuesday, a disappointing construction PMI had kept the Pound on the back foot and temporarily raised additional concerns about the health of the UK economy. The construction business activity index surprisingly slipped back into contraction in September, posting its sharpest fall in activity since the immediate aftermath of the June 2016 EU referendum. The PMI declined to 48.1 from 51.1, with anything below the level of 50 classed as contraction. A lack of any significant progress in the Brexit negotiations and the prospect of higher interest rates from the Bank of England next month were cited for the slowdown which came right off the back of Monday’s underwhelming manufacturing data.

Brexit minister David Davis also spoke at the Conservative Party conference yesterday, claiming that the UK could walk away from negotiations with no deal. The lack of clarity on the state of negotiations has worried investors ever since talks began and recent comments out of government have done little to calm these concerns. In the absence of any surprises in today’s services PMI, a couple of speeches from BoE chief economist Andy Haldane will be the main draw in the UK this week.