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Upbeat services data boosts Pound

Published: Thursday 05 July 2018

  • Sterling bounces back - a bit - on Purchasing Managers’ Index (PMI)
  • Euro service sector activity improves
​​By David Johnson
UK service sector activity was sharply stronger in June, in fact, it was the fastest rise in activity in 8 months. Economists had forecast the index to remain unchanged at 54.0 but it came in at 55.1. Sterling pushed half a cent higher against the USD and EUR as pent-up demand for the Pound popped its head above the parapet. There was a little levelling off before the end of the day but the Pound remained above €1.13 and $1.32. Brace yourselves though because Bank of England (BoE) governor Mark Carney is due to speak later this morning and he is expected to deliver negative vibes about the Pound faster than DHL, DPD, Deliveroo and Yodel combined. Sterling traders could well sell the Pound ahead of Mr Carney’s naysaying.
The Eurozone Purchasing Managers’ Indices (PMI) also gained ground last month, so the Euro also made some gains against the USD. To be fair to the American currency, there weren’t any US traders at their desks to defend the greenback because it was Independence Day and aliens were invading. At least I think that is what it is about. Either way, a bit of unravelling could take place when they get back to their desks later today. This afternoon brings the US service sector PMI, so that’ll be an interesting comparison to the positive data from the UK and EU.
So Thursday will be a quiet one, not through a lack of traders but through a lack of data to get those traders whipped up. US traders will be hung over from yesterday and UK traders will probably also be hung over from the England game on Tuesday. Gawd only knows what they’ll be like if we get into the World Cup Semi Finals.
I hope yours is a good Thursday and I’ll sign off with a very positive news story. As wild fires are such a concern for the area around Aspen, Colorado, the Aspen Chamber Resort Association (ACRA), which runs the 4th July Fireworks display, has chosen to have a display of 50 synchronised drones instead.  I, and probably every pet owner in the world, would love that to be the standard replacement for fireworks. Add in some lasers and a bit of Handel and Robert is your proverbial mother’s brother. Top work ACRA.
A word to the Brexit negotiators
The most important single central fact about a free market is that no exchange takes place unless both parties benefit.
Milton Friedman

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 13:15 US: ADP Non-Farm Employment Change -4.8% -4.8%
USD 13:30 US: Unemployment Claims 227k 225k
USD 14:45 US: Final Services Purchasing Managers' Index 227k 225k
USD 15:00 US: ISM Non-Manufacturing Purchasing Managers' Index 58.6 58.3
USD 19:00 Federal Open Market Committee Meeting Minutes    

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