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British Pound Strengthens Against Dollar on Data for Business Activity

Trades in Europe involving euro/dollar and pound/dollar pairs are showing mixed trends. Despite decent info on growth of business activity in the service sector across various regions of the Eurozone, the euro rate dropped to 1.1434. The pound/dollar grew 57 points to 1.5210 after the release of the PMI report in the UK.

The business activity index for the Spanish service sector in January was 56.7 (forecasted: 50.0, previous: 54.3).

The business activity index for the French service sector in January was 49.4 (forecasted: 49.5, previous: 50.6).

The business activity index for the Italian service sector in January was 51.2 (forecasted: 50.0, previous: 49.4).

The business activity index for the German service sector in January was 54.0 (forecasted: 52.7, previous: 52.1).

The business activity index for the Eurozone service sector in January was 52.7 (forecasted: 52.3, previous: 51.6).

The business activity index for the UK service sector in January was 57.2 (forecasted: 56.3, previous: 55.8).

The retail price index in the Eurozone for December was 0.3% month on month and 2.8% year on year (forecast: 0.2% monthly +2.0% yearly, previous: 0.7% monthly and 1.6% yearly). Previous values were reassessed and increased by 0.1%.

The Chinese Central Bank reduced the reserve requirement rate for banks by 0.5% to 19.5%. This measure was expected and so the market reacted calmly to the decision. The rate was lowered in order to increase liquidity and support China’s economic growth.

In the US data from ADP (Automatic Data Processing, Inc) is coming out on private sector employment, whilst a report on the business activity index is also due. If the ADP and ISM indexes turn out to be weaker than forecasted, USD value will continue to fall throughout the market. Gold will have momentum for growth. It’s worth checking the employment values in the ISM index. It is an important indicator prior to the publication of Friday’s US labor market report.

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