The pound was boosted once again yesterday as service sector data revealed that the UK economic recovery is well and truly under way.

Markit revealed that Services PMI data surpassed expectations and expanded even further to 56.9 in June from 54.9 in May. The pound strengthened across the board as the data adds to the weeks earlier encouraging data from the manufacturing and construction sectors and adds to increased optimism over the state of the UK economy,

The pound was boosted once again yesterday as service sector data revealed that the UK economic recovery is well and truly under way.

Markit revealed that Services PMI data surpassed expectations and expanded even further to 56.9 in June from 54.9 in May. The pound strengthened across the board as the data adds to the weeks earlier encouraging data from the manufacturing and construction sectors and adds to increased optimism over the state of the UK economy,

The US dollar was surprisingly one of yesterday’s worst performing currencies despite data revealing an improvement in the US job market. ADP reported and additional 188,000 jobs were added in June, increasing from 134,000 in May. In a separate report, data showed that the number of people filing for jobless claims fell by 5,000 in June from May.

However ahead of Friday’s unemployment and non-farm payroll figures and today’s US market closure, there are clearly concerns amongst investors if whether the improvement in the job market in June is sufficient enough for the Fed to taper their QE program, thus putting selling pressure on the US dollar.

In a separate note, the US service sector, which makes up 90% of the US economy, grew slower than expected in June. This seems to be another factor behind yesterday’s US dollar slide.

The euro came under selling pressure in early morning trade as Markit revealed that the euro zone service grew less than expected in June. But on a slightly positive note retail sales in May actually managed to improve from -1% to -0.1%, However it was the events in Portugal that seemed to rattle euro investors as 10 year government bond yields briefly moved above 8% following the resignation of two leading ministers creating uncertainty around Portugal’s coalition government.

The military coup in Egypt yesterday sparked demand for safe haven assets, with the Japanese yen being the main benefactor in expense of the US dollar.

Data released this morning by Halifax has revealed that house prices increased in June to 0.6% from 0.4% in May. But the impact on the pound has been negligent, ahead of the Bank of England’s key interest decision. Expectations are for decisions on the interest rate and quantitative easing program to remain unchanged.

The euro zone will be of key focus today with revised first quarter GDP figures due for release this morning and this afternoon we have the ECB’s interest rate decision and Mario Draghi’s subsequent press conference. Given recent events in Portugal, investors will be looking for assurances from Draghi that the ECB will remain accommodative on its stance on monetary stimulus and there is potential that he may provide some forward guidance on what the ECB may do next.

Key Announcements:

10.00am – EUR – Gross Domestic Product (Q1): Expected to show a contraction of 0.2%.

12.00pm – GBP – BoE Interest Rate Decision: Expected to remain at 0.5%.

12.00pm – GBP – BoE Quantitative Easing Program: Expected to remain at monthly purchases of £375bn.

12.45pm – EUR – ECB Interest Rate Decision: Expected to remain at 0.5%.

13.30pm – EUR – ECB Monetary Policy Statement and Press Conference.