European session review: the pound fell markedly on the business activity data

The following data was published:

(Time / country / index / period / previous value / forecast)

7:00 France Business activity index in the services sector (preliminary data) July 49.9 49.5 50.3

France 7:00 PMI in the manufacturing sector (preliminary data) July 48.3 48.6 48

Germany 7:30 PMI in the service sector (preliminary data) July 53.7 53.2 54.6

Germany 7:30 PMI in the manufacturing sector (preliminary data) July 54.5 53.5 53.7

8:00 Eurozone PMI in the manufacturing sector (preliminary data) July 52.8 51.9 52

8:00 Eurozone business activity index in the services sector (preliminary data) July 52.8 52.3 52.7

8:30 UK PMI index for the services sector in July 52.3 48.9 47.4

8:30 UK PMI Manufacturing Index July 52.1 47.8 49.1

The British pound fell against the US dollar after the weak economic reports from UK have raised concern about the UK's growth prospects after the decision of the country to leave the EU. The activity of the private sector fell at the strongest pace since the beginning of 2009 after Brexit, revealed Friday the preliminary survey results from Markit.

The composite output index fell to a 87-month low of 47.7 in July from 52.4 in June. A value below 50 points to contraction.

Purchasing Managers' Index in the services sector fell more than expected to 47.4, 88 month low, from 52.3 in the previous month. The expected level was 48.9.

Manufacturing PMI reached 49.1, compared with 52.1 in June, but above the expected level of 47.8. It was the lowest for 41 months.

"The UK economy has suffered because of the sharp fall in output and new orders following the referendum on EU membership, as uncertainty prevailed" said David Noble.

The true extent of the impact of this uncertainty remains to be seen in the next month, said Noble.

Weak PMI reinforced concerns about slowing growth in the UK, as investors continue to assess the economic impact of Brexit.

At the same time, the dollar was supported after positive US statistics, published on Thursday, boosted optimism about the US economy.

The data showed that sales in the secondary housing market in the US unexpectedly rose in June by 1.1% to 5.57 million units, while a separate report showed that the number unemployment claims unexpectedly fell last week by 1000 to 253000.

The euro was almost unchanged against the US dollar after the release of positive euro-zone data, while the markets assess the decision of the European Central Bank to leave the parameters of monetary policy unchanged.

The euro strengthened the position for a short time after ECB President Mario Draghi said that European markets have coped with the volatility as a result of Brexit, showing "encouraging stability", but confirmed that if necessary, the central bank is ready to act, using all available means.

Draghi also said that the recovery in the euro area still faces a number of challenges for macroeconomic forecasts and downside risks prevail, citing Brexit, slow growth in developing countries and the lack of structural reforms, significant threats to the region's economy.

The comments came after the ECB kept interest rates unchanged at a record low 0.0% that was the expected decision.

Earlier Friday, Markit index of business activity in the euro area (for the production and service sectors) declined from 53.1 in June to 52.9 in July, remaining above the forecasted 52.5.

Germany's manufacturing PMI fell in July to 53.7 from 54.5. The index for the services sector rose to 54.6 this month from 53.7.

The index of business activity in the manufacturing sector in France fell to 50.0 in July from 49.6, while the index of business activity in the services sector rose to 50.3 from 49.9.

EUR / USD: during the European session, the pair rose to $ 1.1040 and then dropped to $ 1.1008

GBP / USD: during the European session, the pair fell to $ 1.3084

USD / JPY: during the European session, the pair rose to Y106.28