Positive services data boosts dollar and pound as the euro suffers further losses

Claire Hogarth06/Αυγ/2014Currency Updates


London closed with the pound having gained 0.4% on the euro following mixed data from the continent. The dollar bounced back from early trading losses, benefiting from a hugely positive ISM non-manufacturing number to end the day flat against sterling.

The pound has continued its strong start to the week jumping 0.2% against both the euro and the dollar in the morning trading following outstanding Markit Services data for the UK whilst the US equivalent saw a 0.2 drop to 60.8. The British Purchasing Managers’ Index rose to 59.1 against an expected reading of around 58 and June’s 57.7. This was the highest reading since last November and Services PMI has now registered above 50, indicating growth, in every month since December 2012. The strong figure was notably driven by growth in new services, with new business growth sustaining the 2014 high hit in June.

Last night Alex Salmond and Alastair Darling held a televised debate over Scottish independence on STV during which Darling pressed Salmond to reveal his ‘Plan B’ in the event that an independent Scotland would not be granted a currency union within the British Pound. Salmond’s response was simply that a currency union would be ‘logical and desirable’ and that the currency issue was manufactured by the Better Together campaign. This morning’s the polls indicate the No to independence vote retains a solid lead.

This morning we have the Halifax House Price Index, as well as UK Industrial & Manufacturing production. At 2pm GMT the National Institute of Economic and Social Research will release its estimate of GDP growth for the past 3 months, traditionally a strong indicator of the official figure released in a month’s time.


The euro suffered a 0.4 percent loss against both its major trading pairs as the trading-bloc wide Composite Report for both Services and Manufacturing disappointed at 53.8. This was an improvement on June’s 52.8 reading but 0.2 below the market expectations.

Broken down the Markit Services report showed above expectation readings for Germany and Spain at 56.7 and 56.2 respectively and the French rising from a worrying 48.2 in June to a positive 50.4, however it’s composite remains sub 50 at 49.4, reaffirming its status as the sick man of Europe. The euro-wide services gains were let down by the Italian services sector dropping to 52.8 from 53.9 in the previous month where an up-tick had been anticipated.

The resulting negative sentiment towards the single currency was not curtailed by retail sales up 0.1% to 0.4% MoM for June and 2.4% YoY or the Portuguese unemployment rate dropping from 15.1% to 13.9%.

This morning we have already had Factory Orders from Germany released, with a horrendous -3.2% reading against 1% called. Today we have Greek CPI and the Italians release their Industrial Output and GDP figures, both of which are expected to return to growth following a period of contraction.


The greenback neared eight month highs against the Euro yesterday driven by excellent aggregated sector based data and factory orders growth. More broadly the US dollar index rose to a 10 month high against its basket of major trading pairs.

The key piece of data driving dollar strength came from the ISM, which reported that economic activity in America’s non-manufacturing sectors posted 58.7 on its index. Of the 17 industries surveyed in the report only Utilities registered a contraction, with the largest growth coming from the Construction industry. This was the strongest reading released by the Institute for Supply Management since December 2005, smashing the market forecast of 56.3.

Factory Orders for June came in at 1.1% up from -0.5% in May and 0.7 above expectations as inventories stabilised and goods shipments rose.

US Balance of Payments data will be released around lunchtime today but otherwise there is little data of note from the States.


Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.