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6 Jan 2014
EUR/GBP rallies after services PMI numbers
FXstreet.com (London) - EUR/GBP has rallied after Eurozone composite Markit services PMI numbers matched expectations with gains on the November print. In contrast, the UK missed expectations, despite continuing to show solid expansion. The pair is currently trading at GBP0.8318.
Modest Eurozone growth despite fragility
The Eurozone composite posted a three-month high of 52.1 in December, up from 51.7 in November, and its second highest level in two-and-a-half years. The Markit report showed that manufacturing continued to lead the recovery. Growth of production accelerated to its fastest since May 2011, as new orders improved aided by a solid increase in new export business.
As may continue to be a running theme for 2014, carrying through from 2013, France and Italy were the rotten apples in the basket. French services again contracted, printing at 47.8, down from November’s 48.0. Italy posted 47.9, beating the November print of 47.2, but still indicating contraction.
UK misses expectations despite robust expansion
By contrast, the UK showed much more robust economic activity, but missed its higher expectations in comparison with the Eurozone. Expectations were for a slight gain on November’s print of 60.0, with the seasonally-adjusted headline business activity index coming in at 58.8, a six-month low.
The Markit report said that UK service sector continued to expand strongly as 2013 came to an end, with activity, new business and employment all again rising at marked rates. It indicated that confidence among service providers was at its highest in nearly four years.
Indication of potential upside wage pressure
The numbers also gave positive news for UK wages, which have continued to slump in real terms, despite a strongly improving UK macro picture. There was further evidence of capacity pressures in December, with backlogs of work rising for a ninth successive month. Many companies responded to rising workloads by adding to their payroll numbers at a marked pace. Employment rose for a twelfth successive month.
EUR/GBP rallies strongly on expectation miss
The pair is currently trading at GBP0.8318 after hitting highs at GBP0.8331. The pair is up 0.38 percent on the day after opening at GBP0.8284. The next major event will be German consumer price index numbers for December, due at 13:00 GMT.
Modest Eurozone growth despite fragility
The Eurozone composite posted a three-month high of 52.1 in December, up from 51.7 in November, and its second highest level in two-and-a-half years. The Markit report showed that manufacturing continued to lead the recovery. Growth of production accelerated to its fastest since May 2011, as new orders improved aided by a solid increase in new export business.
As may continue to be a running theme for 2014, carrying through from 2013, France and Italy were the rotten apples in the basket. French services again contracted, printing at 47.8, down from November’s 48.0. Italy posted 47.9, beating the November print of 47.2, but still indicating contraction.
UK misses expectations despite robust expansion
By contrast, the UK showed much more robust economic activity, but missed its higher expectations in comparison with the Eurozone. Expectations were for a slight gain on November’s print of 60.0, with the seasonally-adjusted headline business activity index coming in at 58.8, a six-month low.
The Markit report said that UK service sector continued to expand strongly as 2013 came to an end, with activity, new business and employment all again rising at marked rates. It indicated that confidence among service providers was at its highest in nearly four years.
Indication of potential upside wage pressure
The numbers also gave positive news for UK wages, which have continued to slump in real terms, despite a strongly improving UK macro picture. There was further evidence of capacity pressures in December, with backlogs of work rising for a ninth successive month. Many companies responded to rising workloads by adding to their payroll numbers at a marked pace. Employment rose for a twelfth successive month.
EUR/GBP rallies strongly on expectation miss
The pair is currently trading at GBP0.8318 after hitting highs at GBP0.8331. The pair is up 0.38 percent on the day after opening at GBP0.8284. The next major event will be German consumer price index numbers for December, due at 13:00 GMT.