Forexpros – The euro remained lower against the pound on Monday, despite data showing that service sector activity in the U.K. posted the biggest drop in more than a decade in August, as concerns over the region’s debt crisis weighed.
EUR/GBP hit 0.8738 during European morning trade, the pair’s lowest since August 24; the pair subsequently consolidated at 0.8750, slipping 0.11%.
The pair was likely to find support at 0.8700, the low of August 23 and resistance at 0.8820, last Friday’s high.
The seasonally adjusted Markit/CIPS Services Purchasing Managers Index fell by 4.3 points to 51.1 in August from 55.4 in July. Analysts had expected the index to decline to 54.3 in July.
On the index, a level above 50.0 indicates expansion in the industry, below 50.0 indicates contraction.
The report said economic uncertainty and slower growth in new business were the main factors behind the contraction, while riots across England in early August played only a minor role in depressing activity.
The weak data, coming after last week’s soft manufacturing and construction data underlined concerns over the outlook for U.K. growth.
In the euro zone, official data showed that retail sales rose by a seasonally adjusted 0.2% in July, above expectations for a 0.1% increase.
June’s figure was revised down to a 0.7% gain from a previously reported 0.9% increase.
But the single currency remained under pressure after German Chancellor Angela Merkel’s ruling party were defeated in local elections on Sunday, amid dissatisfaction over her handling of the euro zone debt crisis.
The euro was also lower against the U.S. dollar, with EUR/USD shedding 0.45% to hit 1.4141.
Also Monday, Sentix said its index of investor confidence in the euro zone fell 1.9 points to minus 15.5 in September, as concerns over the region’s debt crisis weighed. Analysts had expected the index to fall by 4.5 points to minus 18.0.
Forexpros
