Home Fundamental Comment EURGBP rises after downbeat UK services report

EURGBP rises after downbeat UK services report

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Financial services – Canary WharfThe euro rose for sixth straight session versus the British pound on Wednesday after the release of a report showing U.K. services activity eased expansion in May.

PMI services in the U.K. narrowed its expansion pace to 56.5 from 59.5, coming below analysts’ estimates of 59.2.

The data raises concerns as PMI manufacturing released on Tuesday also signaled a slowdown in growth to 52.0 from 51.8.

Gross domestic product in the U.K. registered a 0.3 percent growth in the first three months of 2015, compared to 0.6 percent expansion in the previous three months.

Tomorrow, the BOE is predicted to leave both interest rate and amount of asset purchases unchanged.

In the euro area, the final reading of the composite Purchasing Managers’ Index lingered at 53.6 in May from 53.9 in April, yet came better than the flash reading of 53.4.

While Greece has not reached an agreement with its creditors, still there are hopes an accord could be reached this week.

Even if Greece could not reach a deal this week, it still can repay a debt installment of 300 million euros to the IMF on Friday.

However, it would not be able to repay the other three installments totaling 1.25 million euros due by the middle of this month.

After seeing the proposal presented by the Greek government, creditors are preparing for a take-it-or-leave-it proposal to end a four-month talk of fruitless negotiations.

EURGBP

The EURGBP pair resumed its rebound after the breakout of resistance line, which now has turned into support, to set a new high of 0.7297.

The Parabolic SAR still lifts the pair from below to support the bullish direction, while the breach of the 50-center line, as depicted on the RSI 14, gave some momentum.

For today, the pair will probably hover between key support at 0.7195 and key resistance at 0.7317.

EURGBP fxcomment June 3

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Ahmed Mamdouh Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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