EURUSD & GBPUSD, M15
Eurozone services, composite PMIs revised higher in final February reading. After the upward revision to the manufacturing PMI, the final services reading also surprised on the upside, with the Italian number lifting out of recession territory and coming in at 50.4, while the French reading was revised to 50.2 from 49.8, and the German to 55.3 from 55.1, leaving the overall Eurozone services PMI at 52.8 and the composite at 51.9, versus a preliminary reading of 51.4 versus a 51.0 reading in January. The business activity reading improved to 52.8 from 51.2 in the previous month. Signs of a modest firming of growth then, with survey compiler Markit reporting a strengthening in underlying trends in activity across the region, with Spain a notable exception. German, French and Italian confidence improved and despite still soft growth, Markit also reported that companies continue to take on more staff, which suggests that they remain sufficiently optimistic about the outlook to invest in a larger workforce. Additional arguments then for the hawks at the ECB, who don’t want to commit to a further round of cheap loans just yet.
Across the English Channel, UK Services PMI for February came in at 51.3 versus expectations of 49.9 and better than January’s reading of 50.1. The UK service sector tweaks higher but only marginally. The data from Markit/CIPS suggests that the UK economy is set to grow only 0.1% in Q1 2019. It also reported a fall in new work and a drop in staff levels that was the most significant since 2012.
EURUSD rallied over 1.1337 (current resistance) before falling back to 1.1330 zone – support sits around 1.1325. Cable (GBPUSD) spiked over 1.3175 and has immediate resistance at 1.3200 and the 200 period moving average. Support is the 20-period moving average at 1.3165 and the day low at 1.3150.
Stuart Cowell
Head Market Analyst
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