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Sterling finds temporary relief whilst Euro falters

Sterling finds temporary relief whilst Euro falters

Yesterday, construction PMI for the UK came in with no change from February, but the expectation was for a very slight decrease. This provided a brief Sterling filip as the Sterling selloff halted for the morning.

UK Services PMI will be released today. As the service sector accounted for 80% of the British GDP in Q4, this might attract more attention than usual. Traders are predicting an increase from February’s 52.7 figure to 53.9, which should help strengthen the Pound. A weaker than expected PMI could temporarily hamper any positive Sterling sentiment.

The Euro lost 0.3% overall versus Sterling yesterday. February’s EU Producer Price Index figures showed inflation dropping below consensus. Consequently, the Euro dropped half a cent by lunchtime. Against the Dollar, Euro has further fallen from its 1.1400 highs of 2016 as Dollar sellers consider whether the Greenback is oversold.

Today the markets will look to see if the Purchasing Managers Index (markit services and markit composite) will show a bullish figure for the Eurozone, which will have a positive effect on the Euro against its major peers.

In the US, February Factory Orders slumped to -1.7% after 1.2% in January. Although not entirely unexpected, it has reinforced a bearish bias instigated by Fed Reserve Chair Janet Yellen last week who expressed hesitation on hiking interest rates. The soft Dollar was evident against the Pound as Cable opened at 1.4228 and despite the uncertainty surrounding the Pound, the pair managed to open 0.25% higher this morning at 1.4264.

Data to watch: 9am EUR Markit Services PMI (Mar). EUR Markit PMI Composite (Mar). 9.30 UK Markit Services PMI. 2.45pm US Markit Services PMI (Mar). US Markit PMI Composite (Mar). 2pm ISM Non-Manufacturing PMI. (Mar).

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