Eurozone June services PMI revised up to 52.8 from 52.4. But this still left the reading down from 53.3 in the previous month. Spanish and Italian readings in particular surprised on the upside but the French services number remains stuck in contraction territory, as did the composite reading. The Eurozone composite PMI was unchanged from May, after the upward revision to manufacturing and services readings and still points to ongoing expansion, but while the data confirms that activity picked up again toward the end of the second quarter, the readings don’t capture the impact of the Brexit referendum yet and as such are already outdated to some extent.
EURUSD traded as high as 1.1184 before reversing to 1.1145. In the 4 hour chart support is being provided by the 20 period MA, and resistance by the upper Bollinger band as the pair trade in a tight upward sloping range.
The numbers from the UK were down to 52.3, missing expectations (53.1) and down from last time significantly (53.5). This weaker number for June again does not reflect the Brexit impact (as 89% of data was collected before June 23rd) but will only add to the gloomy outlook. At 52.3 the figures matches the April figure which was a 38 month low. Growth over the whole of the second quarter was the weakest since the first quarter of 2013. Given the post-Brexit political mess and uncertainty, which will be continue for a considerable time, there is a high risk that the UK economy will slip into recession in the second half of the year.
Sterling continues to weaken and trades at 1.3130 against the USD (a post Brexit Low) and EURGBP at a post Brexit high of 0.8486.
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