The GBPEUR exchange rate is flat after the Wednesday morning session after PMI Services data came in at expectations. The 56.6 expectations had the potential to set up the pound for further losses but the number came in close enough at 56.4. European numbers for the services sector were also better, but lockdowns will weigh on the next readings for the EU countries.
GBPEUR is trading at 1.1635 after tumbling through the 1.17 level yesterday.
Strong Orders Boost Pound Ahead of Reopening
British businesses were boosted by a strong rebound in orders for March as preparations got underway for the loosening of restrictions, while some boosted hiring for the first time since the virus started.
The IHS Markit Purchasing Managers’ Index is a measure of Britain’s vital services sector and it showed a jump to 56.4 from 49.6 in February. The reading marked the first move above 50 in three months and, although the number was lower than the 56.6 expected, the result was supportive for sterling.
Another measure for employment was also positive for the first time since February 2020 and hinted at the biggest increase in hiring since the middle of 2019. This will bode well for the next jobs number in the UK after the recent release saw a dip to 5% unemployment.
European countries also saw a surprise lift above the 50 level, but the future path of services will be affected by the slower rollout of vaccines in Europe.
UK and German Stocks See Record Highs
The FTSE 100 and the German were at record highs today after the release of the PMI services data and the hopes for the return to business activity. The FTSE 250 also saw record highs on Wednesday as the UK gets ready to roll out the Moderna vaccine.
Moderna will be the third vaccine used in the country and arrives as the supply of AstraZeneca shots runs down. Production issues have slowed the jab and trials are also on hold after the resurgence of the blood clot issue.
Europe has started to see an uptick in its vaccination rollout, but it still lags far behind and is staring at another bleak season for tourism. Boris Johnson is sticking to his May 17th date, but the options for travel will be limited and potential holidaymakers are looking at having to still take virus tests before and after travel, even to green lighted countries.
France are currently in lockdown and Germany’s Finance Minister has said that it is too soon to open up, so the choices for going abroad are limited. Add the fact that many of the un-vaccinated can’t go, to the expensive testing, and UK citizens will probably choose to holiday closer to home for another year.
The GBPEUR has found support at the 1.16 level, but the surrender of the 1.17 support puts pressure on sterling for coming trading sessions.
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