EUR/GBP approaches 0.8700 lows following Eurozone and UK services data

Euro maintains a moderate near-term bias, with bears looking at the 0.8700 area.
Eurozone's services activity for March has been revised up, yet at levels well below February's.
UK services sector grew at its slowest pace of the last 11 months in March.

Guillermo Alcala FXStreet

The Euro (EUR) extends losses against the British Pound (GBP) for the second consecutive day on Tuesday, approaching the bottom of its near-term horizontal range at 0.8700, from Monday’s highs at 0.8735.

The pair has been unfazed by the moderate upward revision of the Eurozone's HCOB Services Purchasing Managers’ Index figures, which were revised up on Tuesday.

Mixed Eurozone services data

Business activity in the countries sharing the Euro expanded at a 50.2 pace, according to final estimations, an inch higher than the 50.1 preliminary reading but well below the 51.9 reading seen in February.

Spain’s services sector has been the main driver of the revision, with business activity rising to 53.3 from Flash estimates of 51.9. The numbers for the region’s stronger economies, however, have disappointed, as France's sector contracted for the third consecutive month and Germany’s expansion was revised down to 50.9 from 51.2 preliminary estimation and 53.5 in February.

In the UK, the S&P Global Services PMI has also been revised down to 50.5 in March, its slowest growing pace in almost a year, from flash estimations of a 51.2 reading and 53.9 in February.

These figures reflect the strong economic impact of the war in Iran on the Eurozone and UK economies, the day when US President Donald Trump’s deadline on Tehran expires. Investors are holding their breath after Trump threatened to “demolish” Iran’s bridges and energy plants, refusing claims against war crimes.

(This story was corrected on April 7 at 11:15 GMT to say that the Preliminary UK S&P Global Services PMI was 51.2 and not 51.0 as previously stated.)

Economic Indicator

HCOB Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.

Economic Indicator

S&P Global Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in the UK’s services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for GBP.

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