According to just released PMI figures, business activity in Britain’s service sector expanded at the slowest pace in five months for May. Tomorrow, the BoE is scheduled to hold a monetary policy meeting, wherein the central bank is expected to keep its benchmark interest rate steady at 0.5%.

In the Euro area, a spate of services PMI reports were released earlier, with the zone recording a less than feared drop. Later in the day, the ECB is to hold its monetary policy meeting, withthe central bank likely to reaffirm its stance to maintain the stimulus programme until September 2016. Later today, non-manufacturing sector activity and trade data in the US are expected to draw market attention.

Pound Sterling – UK Markets

The just released PMI survey data showed that activity in the service industry, which is the largest contributor to overall UK economic growth, expanded at a slower than expected pace in May. The Pound has given back gains and is trading on a weaker footing against the US Dollar, following the weak data. Separately, data released earlier today showed that house prices in the UK rose at a slower than expected pace in May. Additionally, the BRC shop price index indicated that prices in May dropped from April, largely due to lower food prices and widespread discounting by the retailers. Tomorrow, BoE’s monetary policy meeting will likely have limited market reaction as the central bank is widely expected to retain its current policy.

Yesterday, PMI figures indicated that construction activity in the UK expanded at a faster than expected pace in May, amid signs that business confidence has returned following the general election. Also, in the latest signs of recovery in Britain’s house market, the number of mortgage approvals climbed to their highest level in fourteen months.

US Dollar – US Markets

The US Dollar is trading on a stronger footing against its key peers this morning. Among notable releases today, US trade deficit is expected to narrow from March, while the final print of Markit services PMI reading for May is estimated to remain steady. Also, investors will get a peek inside the US labour market, with the ADP employment report for May scheduled later today. The ADP jobs report is expected to indicate additions in the number of employed people in May. Additionally, the US Fed’s Beige Book is likely to provide some cues on the overall health of the nation’s economy.

The greenback nudged lower against the major currencies in yesterday’s trading session after data on new factory orders showed a contraction for April, indicating weak demand in the economy during the beginning of the second quarter of this year.

Euro – European Markets

Hopes of an imminent Greek debt deal rose after European officials indicated that a consensus has been reached following progress in critical matters. The key focus among market participants today will be whether an agreement on the deal is reached, given that Greece submitted its own proposal plans earlier this week. In positive news for the debt ridden nation, the ECB raised the level of emergency cash available to Greek banks by €500 million, ahead of today’s rate decision and monetary policy meeting. The Euro has surrendered part of its gains against the US Dollar this morning, ahead of the ECB meeting where any change in policy is unlikely to be announced. However investors look forward to the ECB Chief, Mario Draghi’s, comments on the effectiveness of the bank’s asset purchase programme and the situation in Greece. In economic news, the final reading of Euro zone services PMI came in above preliminary estimates, suggesting a steady pace in the region’s economic recovery.

Yesterday, the Euro nudged above the 1.11 mark against the US Dollar on easing fears over the debt situation in Greece.

Other Currencies – Highlights

The Japanese Yen is currently trading weaker against the US Dollar. Early this morning, data showed that activity in Japan’s service industry expanded at the fastest pace since November last year. A rise in business activity in the service sector was supported by an increase in new orders. Also, survey data revealed that service sector providers continued to hire additional workers, a sign of general improvement in business conditions. Separately, BoJ board member, Sayuri Shirai, stated that there was no imminent need of further easing of monetary policy, as he noted that the overall trend of inflation in the nation was anticipated to improve.

In the session ahead, market participants will focus on US economic releases including the final publication of service PMI, trade data and ADP employment change for further direction in the currency pair. Going forward, investors are likely to closely monitor the BoJ Governor, Haruhiko Kuroda’s speech, scheduled tomorrow.