The highlight of the morning will.....>

EUROPEAN DATA: The highlight of the morning will be the France, Germany,

Eurozone and UK PMIs (data team preview at 7:50BST). Consensus for the services,

manufacturing and the composite PMIs are all above 50 (with the exception of the

German manuf PMI). We would remind our readers that the PMIs answer questions

asking whether things are better, worse or unchanged. A lot of things should

have got better for a lot of businesses in July so readings above 50 make sense.

- With wide confidence bands around the data we think that we would need to see

a decent surprise to expectations in order to have a noteworthy market impact.

For the upside, we think for the market to move into a risk positive mood we

would need to see beats of 5-6 points. Next objective for EURUSD is 1.1657 and

for GBPUSD the next resistance is at 1.2768 with key resistance at 1.2813.

- On the downside, misses by about 3 points would keep most PMIs below 50 and

leave the market more cautious about the pace of the economic recovery across

Europe and the UK. In terms of key technical levels we continue to monitor the

ascending triangle in Bunds with a break of 176.95 opening moves to 177.77 with

next key gilt resistance at 138.48.