The Euro firmed against the Pound on Thursday morning after Services PMI data out of the UK disappointed. Gains are expected to be relatively muted however as investors look ahead to the afternoons European Central Bank policy meeting and rate decision.
According to Markit’s Services PMI report, service sector activity in the UK fell to its lowest level in nine-months. That may sound bad but the index showed that the sector continued to expand relatively strongly.
The PMI dropped to 57.6 in March, down from the 58.2 recorded in February. Economists had been forecasting for a rise to 59. Any figure above 50 indicates growth, whereas one below indicates a contraction.
“While March saw growth slow across the services, manufacturing and construction sectors, all three continue to expand at very strong rates, meaning that the economy looks to have grown by at least 0.7% again in the first quarter,” said Chris Williamson, Chief economist at Markit.
The Pound also softened against the US Dollar and other peers following the release.
The Euro’s gains are likely to be short-lived as the European Central Bank policy meeting approaches. Concerns over deflation are high following Monday’s and yesterday’s weak inflation data. Economists will be looking to see if the Central Bank will take any action to stave off the threat.
The Euro was also under pressure from data which showed that growth across the regions private sector slowed in March and companies kept cutting prices in order to stimulate consumer spending. The Eurozone final composite PMI came in at 53.1.
France and Ireland posted their best monthly growth figure in several years whilst Germany and Italy reported a decline.
Current Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3763 ,
Euro,,British Pound,0.8285 ,
Euro,,Australian Dollar,1.4914 ,
Euro,,Canadian Dollar,1.5157 ,