EUR and GBP: Indices for the services sector in many countries are declining, putting pressure on the economy

The euro has once again dropped against the background of data in which stagnation is noted in the economies of Italy and France. Only the prospect of growth in the German economy keeps the EURUSD from a larger downward movement.

According to today's report, the Purchasing Managers Index (PMI) for the eurozone services sector remained unchanged in January of this year and amounted to 51.2 points against 51.2 points in December last year. Economists had expected the PMI for the eurozone services sector to drop to 50.8 points. The eurozone composite PMI fell to 51.0 points in January against 51.1 points in December.

Let me remind you that the index value above 50 points indicates an increase in activity.

The above figures for the euro area were mainly saved due to data on the PMI purchasing managers index for the services sector in Germany, which in January of this year rose to 53.0 points, whereas in December the PMI was 51.8 points.

This is where the good news ends. In France and Italy, similar figures continue to be below 50 points, dropping lower and lower, indicating a decline in activity, which will negatively affect the prospects for economic growth in the first quarter of this year.

According to the report, the Purchasing Managers Index (PMI) for France fell to 47.8 points in January against 49.0 points in December. In Italy, the same indicator for the service sector also turned out to be below 50 points and amounted to 49.7 points.

As a result of such weak data, the euro continued its decline against the US dollar, gradually approaching the support level at 1.1400.

The British pound broke through the next weekly lows and continued to decline after the release of weak data on the services sector. All this, of course, may affect the statements of the Bank of England after the decision on interest rates, which will be known this Thursday.


According to the report, PMI for the services sector fell to 50.3 points in January of this year, which is a low of two and a half years. These data once again confirm the concerns associated with Brexit and uncertainty, which negatively affects the economy.

As for the composite index PMI, in January it dropped to 50.1 points from 51.2 points in December. Economists had expected the index to be 51.5 points in December.

The Australian dollar rose today in the morning after the Reserve Bank of Australia left the key interest rate unchanged at 1.50%, but said it had good prospects for the future.

The RBA believes that downside risks for the global economy have increased, but the current monetary policy is consistent with sustainable economic growth.

Annual inflation is expected to return to the target range from 2% to 3%, while Australia's GDP growth is projected at 3% this year. As for unemployment, it can be reduced to 4.75%.

The material has been provided by InstaForex Company -