Just released data has shown that Britain’s service sector activity expanded at the fastest pace in eight months for April. The survey is likely to ease fears that growth in the economy slowed down, ahead of the elections. Sterling is expected to remain range bound as focus among investors shifts towards tomorrow’s general election.

In the Euro zone, the final print of Markit services PMI came in higher than initial estimates, indicating that domestic demand is supporting recovery in the region. Across the Atlantic, the ADP employment change data scheduled later today will likely attract market attention.

Pound Sterling – UK Markets

Data just released for the services sector indicates that activity in the non-manufacturing industry unexpectedly picked up pace at the start of the second quarter. The Markit services PMI index contradicts Britain’s manufacturing and construction sector readings for April which showed that growth has slowed just before the general election. Following the release of the data, Sterling has trimmed previous losses and is trading higher against the US Dollar. Going forward, the Pound’s resilience will be put to test in the run up to tomorrow’s elections and even extend into renewed weakness across the board if the result surprises.

The Pound traded higher against the US Dollar yesterday. Data showed that activity in the UK’s construction sector suffered a sharp slowdown in April, amid uncertainty ahead of tomorrow’s general election. The Markit construction PMI eased more than expectations for April, as output and new orders grew at the slowest pace since June 2013. However, the survey indicated that employment in the sector continued to grow, signaling that companies expect their businesses to recover soon.

US Dollar – US Markets

Reversing its earlier session gains, the US Dollar traded on a weaker footing against the Euro and nudged lower against the major currencies after data showed that trade deficit for March widened to its highest level in more than six years, as the effects of a labour dispute at West coast ports and a stronger US Dollar weighed heavily on foreign trade. After declining sharply in January and February, imports soared higher for March led by an increase in demand for cell phone and other household goods. In other economic news, data from ISM showed that non-manufacturing PMI unexpectedly climbed for April.

The US Dollar is trading lower against the Euro this morning, ahead of the ADP employment change data that is scheduled for release later today.

Euro – European Markets

The Euro is trading higher against its major counterparts this morning, after the final reading of Markit services PMI in the Euro zone indicated that growth in the service industry has picked up momentum in the start of the second quarter of this year, supported by buoyant new business.

Yesterday, the EUR/USD currency pair initially fell close to the 1.10 mark, but later regained some ground following optimistic forecasts from the European Commission. Forecasts for GDP and inflation were revised higher for 2015 with the official report indicating that Europe’s economies are likely to benefit from a weaker Euro and the central bank’s stimulus measures. As a result, the commission expects the Euro zone’s economic growth in 2015 to accelerate to 1.5% from 1.3% previously forecast and consumer prices to grow this year at 0.1% from a price fall of 0.1% estimated three months ago. Separately, the EU’s Economic Affairs Chief revealed that discussions between Greece and its creditors were put on hold, until Athens agreed to a new economic reform programme to unlock further aid.

Other Currencies – Highlights

The New Zealand Dollar fell to a multi-week low against the US Dollar yesterday, after the unemployment rate in the first quarter of this year confounded market expectations, even as it remained steady with the revised reading for the previous quarter. The higher than expected jobless rate seems to have fuelled speculation that the central bank will cut its key interest rates later this year. Data showed that the number of employed people rose modestly during the first quarter, trailing market expectations of a much higher advance. Moreover, the growth in the labour costs index also declined more than market expectations on both quarterly and annual basis. Overnight the GlobalDairyTrade auction reported that dairy product prices, New Zealand’s largest export, fell consecutively for the fourth time in row since the last auction in mid-March.

Moving ahead, market participants will keep a tab on today’s ADP employment change data in the US, amid no domestic releases, for further direction.