The Euro was trading softer against the Pound on Wednesday after positive UK service PMI data bolstered the Pound and as concerns over deflation and a diverging of economies in the Eurozone weighed.
The Euro initially found support a report which showed that the single currency region’s services purchasing managers index increased to its highest level in 32-months. The PMI rose to 52.6 last month, better than the final reading recorded in January of 51.6, beating economist forecasts for a reading of 51.7.
Another report showed that private businesses in the Eurozone saw their quickest pace of growth in over 2-years in February.
The data renewed concerns that the region’s top two economies are diverging as Germany charged ahead of the struggling France. Germany’s services PMI came in at 55.9, far better than the 47.2 figure seen in France. A figure above 50 indicates expansion whereas a number below indicates contraction.
The Eurozone’s latest GDP report offered little report as it showed that GDP contracted by 0.4% overall in 2013. The hoped for strong recovery is still nowhere in sight as unemployment remains at record levels and the risk of deflation remains high.
The currency is likely to remain under pressure ahead of tomorrow’s European Central Bank policy announcement. Pressure is building that the Bank should take action to stave off the threat of deflation in the region.
The Pound meanwhile was supported by data showed that the UK’s services sector output expanded more than forecast in February. New orders increased more-than-expected and optimism about the coming year climbed to its highest-level in more than four-years.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3728 ,
Euro,,Australian Dollar,1.5326 ,
Euro,,Canadian Dollar,1.5206 ,