httpvh://www.youtube.com/watch?v=U-5R1Awegcs  To start the day on Tuesday it was UK services data that surprised to the upside. The feel good factor of the Royal wedding, bank holidays and warm weather had long since passed leading analysts to expect a poor figure. But despite waning consumer confidence and big name retailers being pinned back the PMI data posted 53.9 against an expected figure of 53.5. Sterling rallied on the news clawing back nearly a cent on both the Euro and US Dollar. However, analysts have warned not to get too carried away with the news. Job creation within the sector was fairly stagnant and there is still concern over whether or not the private sector can absorb public sector job cuts. The feeling is that with the construction and manufacturing sectors beginning to slow, unemployment could remain stubbornly high for some time yet.

PMI services for the Eurozone was out at 53.7 compared to last month’s reading of 56 showing that the rate of expansion has started to slow. High levels of inflation across Europe and fears over Greece meant consumers were less willing to spend in May. EU retail sales consequently took a hit and were -1.1% versus 0.7% in April, which was slightly worse than anticipated.

To add to European woes, Portugal’s debt was downgraded to junk status by Moody’s credit ratings agency yesterday evening. The agency is concerned that Portugal, much like Greece, will not be able to achieve the deficit reduction targets set out as conditions for its first bail out. Moody’s made reference to the current negotiations over Greece in its report and believe that if a second bail out were drawn up that private lenders would have to make a significant contribution. The timing of the news couldn’t be worse as banks meet today in Paris to discuss a second bail out for Greece.

The big announcements today include EU GDP out at 10am this morning and ISM Non-manufacturing data out in the US at 3pm. Aside from that all eyes will be on any news coming out of Paris ahead of the ECB interest rate decision tomorrow.