Eurozone manufacturing PMI revised slightly higher and the January reading is now given at 55.2, versus 55.1 reported initially and up from 54.9 in December. Austria, the Netherlands and Germany are the top performers, while Markit warned that the downturn in Greece is accelerating. The recent imrovement in France meanwhile continued to gather pace, which manes the overall Eurozone recovery is looking more balanced, which is encouraging. Indeed, the French reading is at a 68 month high now. And Markit’s new Future Output index, which focuses on production expectations 12 months ahead signaled that business optimism hit the higehst level since the start of the time series in July 2012. Good news all around then so far, although political risks in particular are brewing and this will underpin Draghi’s decision to leave asset purchases in place for now, although the flag at the low EUR from the US will also put some pressure on Draghi, which has kept the currency down with his very accommodative policy.
UK manufacturing PMIs were in line with expectations at 55.9. Markit the producers of the data quote “The UK manufacturing sector made a strong start to 2017. Output rose at the fastest rate since May 2014, as new order intakes expanded at a robust pace. Price pressures intensified, however, as input cost inflation surged to a survey record high and output charges also increased at one of the steepest rates in the series history.” The rise in input costs is an inevitable consequence of weak sterling.
EURGBP broke a key support level on the 1 and 4 hour charts at 0.8565 and further weakness could be expected if the pair remain below this important area, overnight resistance is at 0.8591.
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