UK services PMI narrowly missed expectations of 58.1 and posted a figure of 57.7, but despite it being worse than expected, services which accounts for roughly 80% of UK GDP posted growth. GBP’s recent strength continued despite the slightly below forecast figure, with GBP gaining against a basket of currencies.
Yesterday the Dollar momentarily showed some strength after US non-farm payrolls surpassed expectations and rose by 288,000 in June. This figure exceeded the forecast of 214,000 but only temporarily supported the greenback, with GBP/USD returning to the mornings levels shortly after.
On another positive note, the unemployment rate dropped to 6.1%, which is the lowest rate since September 2008, the same month that US investment bank Lehman Brothers collapsed. Economists had expected the jobless rate to remain unchanged at 6.3%. Despite this positive fundamental data the Dollar ended up level with its major pairings ahead of the 4th of July Independence Day holiday.
The European Central Bank has left interest rates unchanged across the Eurozone .The main refinancing rate staying at a record low of 0.15%Banks are still being hit with negative interest rates when they leave cash at the ECB with the deposit facility rate pegged at -0.10%.And the marginal lending rate (charged when banks borrow overnight from the ECB) remains at 0.4%.
During the ECB press conference to discuss these decisions made Mario Draghi reiterated the ECB's forward guidance. Essentially that Eurozone interest rates will remain at present or low interest rate levels for an extended period. This should keep the Euro currency weak for an extended period.
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