Summary:
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Upbeat readings from European service PMIs
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UK reading: 50.0 vs 49.1 exp
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GBPUSD holding above $1.31
Today’s economic calendar is fairly light with the main data points coming in the form of PMI releases from across Europe. There’s a couple key events later this week with the ISM non-manufacturing PMI tomorrow one to watch before the main event Friday at 1:30PM (GMT) where we will get the release of the final US jobs report for 2019.
Overall the final services PMI readings from the Eurozone are pleasing with a Euro-area wide print for December coming in at 52.8 vs 52.4 expected (prior reading was 52.4). While this may not seem too impressive by historical standards it does mark the 3rd consecutive month in which this metric has topped estimates and also means that the composite PMIs are showing some encouraging signs after sustained weakness since the start of 2018.
Having said that, the data does mean that according to these surveys the final quarter of last year was the worst since 2013 - when the bloc was in the midst of the debt crisis! The readings are also commensurate with a GDP growth figure of just 0.1% and show that economic activity in the Euro area has pretty much flat-lined.
Composite PMIs for the Eurozone are showing some potentially encouraging signs but remain low by historical standards. Source: Bloomberg
In the UK the final services PMI release for December came in at 50.0, against a consensus forecast of 49.1 and a prior reading of 49.0. Similar to the Euro area figures this is the 3rd monthly beat in a row and also means that despite 3 sub 50 prints in the past 12 months, we are yet to see consecutive readings in contractionary territory. It is also the second month running that the final readings have been revised higher from the initial flash releases, suggesting that while the UK economy is far from firing on all cylinders, perhaps things are not quite as bad as some make out. The pound has received a further small boost from this, after already beginning the week higher against all its major peers and is attempting to gain traction back above the $1.31 handle once more.
GBPUSD has gained in recent trade, aided by a better than expected services PMI print from the UK. The market is now firmly back above the $1.31 level after rising by around 70 pips in the past couple of hours. Source: xStation
