Forex: EUR/GBP: Spanish services sector surprisingly expands; Italy and UK contract

on Dec 4, 2013
Updated: Oct 21, 2019
Listen Wednesday, December 4th:_ The EUR/GBP yesterday scored a 0.15 percent intraday gain, with the daily candle opening at 0.8277 and closing at 0.8292. The pair initially fell to its lowest point since 11 January, at 0.8250, following a rise in the UK November Construction PMI to 62.6. But the quote then rebounded to a high of 0.8293, seemingly on the unexpected drop of 2,470 in Spanish unemployment in November (data released before the UK Construction PMI).

Today the price initially started to rise but encountered resistance at the descending 89-hour simple moving average and fell to an ongoing intraday low at 0.8280. Then Markit released economic data for Spain, Italy and the Eurozone and the price jumped sharply to a playing-through intraday high at 0.8320. There’s since been some retracement and currently the pair is trading at 0.8308.

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Spain’s services sector did unexpectedly well in November, with the Services PMI clocking in at 51.5, well up on October’s 49.6, for the best rate of growth since June 2010 and easing fears for the country’s return to sustained economic growth.
The Manufacturing PMI released two days ago showed that production had shrunk again in November and raised fresh doubts about the progress of Spain’s economy in the third quarter. Markit notes that there have been previous false Spanish prophets of growth and that the current rise in the Services PMI could be a part of this phenomenon.

And in Italy, services were back in contraction in November, at 47.2 well down on October’s 50.5 and confounding expectations for continuing growth at 50.4.
The November slump follows two consecutive months of expansion. New orders in the services sector fell during the reporting period due to weaker domestic market demand and employment shrank the most since August.

The Eurozone is becoming increasingly dependent on the German economy, according to a poll released today of businesses in the Eurozone. The Markit Final Services PMI rose to 51.2 points in November from 50.9, versus expectations for no change, and supports studies showing that Germany is playing an increasingly dominant role in the region’s growth. The German Services PMI reached a 10-month high at 55.7 points in November whereas economic activity in the French and Italian services sectors shrank at the fastest pace in five months.

Eurozone Retail Sales m/m checked in today with a drop of 0.2 percent in October, as against the expected 0.2 percent rise and following a 0.6 percent drop in September. Revised GDP q/q for the third quarter matched the prior and expected rise of 0.1 percent.
In the United Kingdom, the BRC Shop Price Index y/y fell by 0.3 percent in November and Services PMI also declined during the month, to its lowest level in five months at 60.0 and well shy of the multiple-year high of 62.5 reached in October. New orders in the services sector rose again in November, albeit at a slower pace than their October peak. Services employment continued to increase and inputs pricing reached a nine-month high, while output prices reached their highest level since May 2011
**Resistance levels today: 0.8285, 0.8300 and 0.8320.**
**Support levels: 0.8270, 0.8245 and 0.8230.**


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