European PMI data shows contraction
Written by
Daily Currency Update
There have been several early releases from Europe this morning, covering the manufacturing and services sectors. French, German,, and Eurozone flash PMI releases all fell below the 50.0 gauge showing contraction, however, each of the manufacturing releases was better than the forecast numbers. It was largely expected that the PMI releases would remain within the contraction territory in January. The UK is also due to release manufacturing and services PMI data this morning, ahead of the US this afternoon. Services PMI is the one to watch with the past three releases showing expansion – 53.1 is forecast. GBP/USD currently trades above 1.2700 having touched 1.2745 in the past 24 hours. GBP/EUR has started a range-bound move between 1.1680 and 1.1700, currently sitting at 1.1688.Key Movers
The Eurozone data released this morning acts as a prelim to tomorrow's interest rate announcement and following the press conference. Although no change is expected from the 4.5% main refinancing rate, the following policy statement and press conference could offer guidance on future moves. Market participants are currently pricing in a 100-basis point cut in rates this year, with a 95% chance that the first will be in June. Any change in the underlying economic indicators could see this prediction change, which makes more of an event of macroeconomic data in the coming months. As mentioned above, GBP/EUR remains range bound just under 1.1700 and EUR/USD is taking a slow rise from Tuesday's afternoon fall to 1.0825. The pair currently sit at 1.0890.Expected Ranges
- GBP/USD: 1.0650 - 1.0810 ▲
- GBP/EUR: 1.1670 - 1.1740 ▲
- GBP/AUD: 1.9270 - 1.9390 ▲
- EUR/USD: 1.0820 - 1.0950 ▲