Euro holds gains against the Pound awaiting Eurozone and UK Services PMIs

The Euro (EUR) remains practically flat against the British Pound (GBP) on Wednesday, trading at 0.8573 at the time of writing and holding gains from the last two days after bouncing from the 0.8540 area on Friday. The Euro has been boosted by a positive risk mood and lower Oil prices while traders await the final Eurozone and UK Services Purchasing Managers (PMI) figures, due later in the day.

Preliminary estimates revealed that services activity in the Eurozone area improved to 51.6 in July, its best performance in the last five months, from 49.4 in June. In the UK, the preliminary S&P Global Services PMI showed an acceleration to 51.8 from 48.8 in June.

Also on Wednesday, Eurostat will release the Eurozone Producer Prices (PPI) Index for June, which is expected to have shown a 0.3% monthly contraction, after the 0.2% increase in May, with the yearly PPI easing to 4.6% from 5.9% in the previous month.

Apart from that, analysts at Rabobank highlight that the dovish tone of the Bank of England Governor Andrew Bailey following last week’s monetary policy meeting is weighing on the Pound. “Despite a more hawkish voting split than the market had expected from the MPC, Governor Bailey’s tone was dovish, suggesting little support for the pound from the BoE,” said the Rabobank expert in a note.

Economic Indicator

HCOB Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.

Economic Indicator

S&P Global Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in the UK’s services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for GBP.