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Sterling (GBP) Boosted by Robust PMI Data, Euro-Zone Sentiment Nudges Higher

Sterling (GBP) Boosted by Robust PMI Data, Euro-Zone Sentiment Nudges Higher

2020-02-05 10:02:00
Nick Cawley, Analyst
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EUR and GBP Prices, News, Analysis and Charts

  • Sterling gets a boost from UK sentiment data.
  • Euro-Zone data also beats as 2020 starts on a positive note.

UK PMI Data Points to Robust Growth in Services Sector

January data pointed to UK business activity, new work and employment all expanding at a faster pace seen that at the end of 2019, according to IHS Markit, as final UK PMI data beat earlier expectations. UK services data hit 53.9, beating the preliminary reading of 52.4 and up sharply from 50.0 seen in December. According to Duncan Brock, group director at CIPS, "All in all a positive start last month, and if political stability is maintained throughout the year with political promises becoming reality, then 2020 could become a stellar year for service companies."

UK PMIs showing strong growth in January

Sterling (GBP) reacted positively to the data and pushed back into the mid-1.3000s against the US dollar after hitting a low of 1.2940 on Tuesday. The pair are now touching the 20-day moving average and near the next resistance zone either side of 1.3100. GBP/USD remains stuck in a range with strong resistance at 1.3212 and strong support around 1.2940-1.2950. To breakout from this range, Sterling will need a major fundamental driver with UK-EU trade talks the likely source.

GBP/USD Daily Price Chart (July – February 5, 2020)

GBPUSD chart showing sterling rallying higher

Euro-Zone PMIs Nudge Higher in January

The final release of the Euro-Zone PMIs for January ticked higher and beat the preliminary readings with the composite number rising to its highest level since August, easing fears of a recession in the single block. Business confidence also improved and is now running at a 16-month high, according to data provider IHS Markit. EUR/USD moved higher before slipping back towards 1.10250. ECB President Christine Lagarde speaks later in the session and the single-currency needs a boost otherwise a re-test of support at 1.0992 looks increasingly likely.

Euro-Zone PMIs showing improvement in sentiment
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EURUSD Daily Price Chart (June – February 5, 2020)

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What is your view on the Euro and the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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