EUR/GBP pulls back to 0.8625 with the Pound trimming losses after Wednesday’s sell-off
- The Pound pares some losses as UK Gilts rebound and UK Services activity beats estimations.
- The Euro pulls back from highs despite better-than-expected HCOB Services PMI numbers.
- On Wednesday, revived concerns about UK finances sent the Pound tumbling.
The Euro is trading lower against the British Pound on Thursday, retreating from the 3 ½ month highs at 0.8670 hit on Wednesday as the uncertainty about Chancellor Rachel Reeves revived concerns about the UK’s fiscal health.
UK Prime Minister, Keir Starmer, was forced to show the Government’s support to Rachel Reeves on Wednesday, as her tearful image at the parliament, following diverse U-turns on welfare policies, opened a multi-billion hole in her team’s budget plans.
UK Gilts are showing a significant rebound on Thursday following Wednesday’s sell-off, which is providing some support to the British Pound.
In the macroeconomic front, the UK S&P Global Services PMI has been revised higher to 52.8, from the preliminary estimation of 51.3, which points to the strongest activity in almost a year.
These figures are contributing to improving confidence in the UK economy and have offset the impact of better-than-expected services activity figures in the Eurozone. The region’s services sector returned to growth in June, featuring a 50.5 reading in the HCOB Services PMI, following a 49,7 reading in May, and improving the 50.0 level previously estimated.
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.
Read more.Last release: Thu Jul 03, 2025 08:30
Frequency: Monthly
Actual: 52.8
Consensus: 51.3
Previous: 51.3
Source: S&P Global
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
