Pound Sterling Euro (GBP/EUR) Exchange Rate Strengthens on Construction Sector Expansion
An unexpected improvement in the UK construction PMI encouraged the Pound Sterling to Euro (GBP/EUR) exchange rate to push higher on Tuesday. Currently the Pound is up about 0.2% against the Euro.
Although the construction sector is a fairly minor component of the UK economic activity the PMI’s uptick from 52.5 to 53.1 still encouraged greater confidence in the economic outlook.
As the latest Eurozone retail sales figures fell short of forecast this put further pressure on the weakening Euro (EUR).
Pound Sterling to Euro (GBP/EUR) Exchange Rate Under Pressure Thanks to Brexit Worries
UPDATE 14:46 BST: As EU officials express disappointment in the UK’s latest set of Brexit proposals the GBP/EUR exchange rate has come under additional pressure.
With the UK and EU still appearing as at odds over key issues as ever, the appeal of the Pound has declined as investors remain wary of the prospect of an exit without a deal.
Pound Sterling Euro (GBP/EUR) Exchange Rate Shakes Off Falling Eurozone Unemployment
UPDATE 13:04 BST: An improvement in the Eurozone unemployment rate was not enough to shift the Pound Sterling to Euro (GBP/EUR) exchange rate this morning.
While unemployment fell in every Eurozone country over the last twelve months this failed to boost the Euro (EUR), which remains under pressure thanks to global trade worries.
The mood towards Pound Sterling (GBP) remained muted, meanwhile, as concerns over the likely shape of the UK’s future relationship with the EU persisted.
Pound Sterling Euro (GBP/EUR) Exchange Rate Static After Weaker Eurozone Manufacturing Data
Confidence in the outlook of the Eurozone economy continued to deteriorate at the start of the week, but this failed to offer the Pound Sterling to Euro (GBP/EUR) exchange rate much of a boost.
Markets were not impressed to find that June’s raft of Eurozone manufacturing PMIs were weaker than anticipated, with factory growth slowing to an eighteen-month low.
This suggests that the Eurozone economy flagged further during the second quarter, to the disappointment of Euro (EUR) investors.
Particular concern centred on cooling export order growth, with the odds of the currency union regaining its lost momentum in the near term diminishing.
Coupled with resurgent fears over the possibility of a US-EU trade war, this has left EUR on a generally weaker footing on Monday morning.
GBP/EUR Exchange Rate Unchanged after Steady UK Manufacturing Growth
Meanwhile, an unexpected uptick in the UK manufacturing PMI also left the Pound Sterling to Euro (GBP/EUR) exchange rate unmoved.
The index only showed a small improvement on the month, strengthening from 54.3 to 54.4 in June, and the mood towards GBP exchange rates remains muted.
As markets await further Brexit developments the upside potential of the GBP/EUR exchange rate appears limited.
Robust UK Services PMI Forecast to Support GBP/EUR Exchange Rate
That being said, Wednesday’s UK services PMI could offer the Pound Sterling to Euro (GBP/EUR) exchange rate a rallying point.
As the service sector remains the primary growth engine of the UK economy, investors are keen to see signs that the sector remains in a good state of health.
Any uptick in June’s index could thus give GBP exchange rates a strong boost across the board, increasing confidence in the economic outlook.
On the other hand, a disappointing showing may leave Pound Sterling (GBP) vulnerable to a fresh slump.
Even if the services PMI impresses, the GBP/EUR exchange rate could still come under pressure if the latest UK cabinet meeting highlights persistent divisions over the UK’s future relationship with the EU.
Pound Sterling Euro (GBP/EUR) Exchange Rate to Benefit from Mounting Global Trade Tensions
If trade tensions between the US and EU continue to ramp up this could help boost the Pound Sterling to Euro (GBP/EUR) exchange rate.
Should the Trump administration go ahead with plans to impose tariffs on EU car imports, the appeal of the Euro is likely to deteriorate markedly.
Any de-escalation in the protectionist US rhetoric would give investors fresh cause for confidence, on the other hand, to the benefit of EUR exchange rates.
Focus is also set to fall on the latest political developments in Germany, with Chancellor Angela Merkel’s fraught coalition appearing to be caught up in fresh turmoil.
Further disappointment from Eurozone data may also support the Pound Sterling to Euro (GBP/EUR) exchange rate over the coming days.