News Column

Pound Slides After UK Services PMI Hits 3-month Low

July 3, 2014

BRUSSELS (Alliance News) - The pound weakened against the other major currencies in the early European session on Thursday following the release of a report showing a more-than-expected decline in U.K's services PMI in June.

Data from Markit economics showed that the U.K's service sector purchasing managers' index fell to a 3-month low of 57.7 in June, from 58.6 in May. The economists expects index to be at 58.1.

The pound fell to a 2-day low of 1.7132 against the US dollar, from an early high of 1.7165. If the pound extends its fall, it is likely to find support around the 1.69 area.

Against the Swiss franc, the pound slipped to 1.5230 from an early high of 1.5261. At yesterday's close, the pound was trading at 1.5247 against the franc. If the pound continues its slide, it may find support around the 1.51 area.

Moving away from an early high of 0.7953 against the euro, the pound slipped to 0.7971. The pound may find support near the 0.80 area.

Eurostat showed that Eurozone retail sales remained unchanged from the previous month in May. Retail sales were flat monthly, following a 0.2% decline in April, revised from a 0.4% gain reported earlier. Economists had forecast 0.3% sales growth for May.

The pound retreated to 174.62 against the yen, from an early multi-month high of 174.92. The pair was quoted at 174.63 at yesterday's close. On the downside, the pound is likely to find support around the 172.14 zone.

A survey by Markit Economics showed that Japan Services PMI edged down to 49.0 in June from 49.3 in May, signaling contraction for the third consecutive month. The decrease in service sector output was driven by the recent increase in sales tax.

Looking ahead, at 7:45 am ET, the European Central Bank will announce its interest rate decision. Economists expect the bank to retain interest rates unchanged at 0.15%. At 8:30 am ET, ECB President Mario Draghi will give press conference following interest rate announcement.

In the New York session, US jobs data and ISM non-manufacturing PMI for June, weekly jobless claims for the week ended June 28 and trade data for May are set to be released.

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Source: Alliance News

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