U.K. Fundamentals Unexpectedly Improve, Raising the Outlook for Growth and Inflation
Service-based activity in U.K. unexpectedly improved in February as the PMI reading rose to 43.2 from 42.5 in previous month amid expectation for a drop to 41.9. The breakdown of the report showed the employment index increased from the previous month while input prices fell to its lowest level since records began in 1996.
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GBPUSD – Service-based activity in U.K. unexpectedly improved in February as the PMI reading rose to 43.2 from 42.5 in previous month amid expectation for a drop to 41.9. The breakdown of the report showed the employment index increased from the previous month while input prices fell to its lowest level since records began in 1996. In addition, the BRC shop price index advanced 1.2% during the month, after rising 0.2% in previous month, which increased the annual growth rate to 1.9%. The BRC quoted rising food prices as the cause behind the pick-up in prices, which was driven by higher import prices but nevertheless, the data has certainly helped to lower the risks for deflation, which could lead the BoE to hold a neutral policy stance going forward as the benchmark interest rate falls close to zero. Meanwhile, a separate report by Nationwide showed that consumer confidence in the region unexpectedly improve in February as the index climbed to 43 from a revised reading of 41 in the previous month, which suggests that households are becoming less pessimistic towards the economy as policy makers utilize all of their available tools to steer the economy out of a deepening recession. Discuss the topic and your trade ideas in the GBP/USD Forum.
EURUSD – The final services PMI reading for the Euro-Zone was revised higher to 39.2 from an initial reading of 38.9, but remains sharply lower compared to the 42.2 reading seen in January. Meanwhile, the final composite reading was confirmed at 36.2, which is the lowest since the series began in 2005, and the outlook for future growth remain bleak as the economy is expected to face its worst economic slump since World War II. Discuss the topic and your trade ideas in the EUR/USD Forum.
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