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July 06, 2021 @ 18:28 +03:00
A series of disappointing data from Europe caused the single currency European indexes to fall early in Tuesday’s trading session.
German data showed a 3.7% dip in manufacturing orders for May, more than outstripping the growth in April and missing expectations of a 0.9% average forecast for growth. Hopes that the manufacturing sector would bring the economy back to pre-surge levels at an accelerated pace, despite weakness in the service sector, were in doubt.
The ZEW later published an equally disappointing assessment of business sentiment for July. The index fell from 79.8 to 63.3, its lowest value since January. The evaluation of the current situation improved sharply, so much of the negativity came from weakening expectations, resonating with a dip in manufacturing orders.
A weak euro dragged the pound down against the dollar. Nevertheless, the EURGBP pair is developing a downtrend after a pause in previous weeks, supported by housing market data. Construction PMIs have reached new all-time highs on the back of increased activity and a jump in prices.
Moreover, for the first time since 2008, Housing Equity Withdrawal was positive in the first quarter, exceeding 4.0 bn. During the last housing boom in early 2000, interest rates in the UK were noticeably higher than in Europe and the US, supporting Sterling’s strength against the euro and the dollar. We may be in the early stages of such a new cycle.
The FxPro Analyst Team