Pound Euro (GBP/EUR) Exchange Rate Wavers amid Economic Pessimism
The Pound Euro (GBP/EUR) exchange rate is volatile today as lacklustre PMI reports fuel economic slowdown concerns.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1612, virtually unchanged from this morning’s opening rate.
Pound (GBP) Muted amid Economic Uncertainty
The Pound (GBP) remains quiet today as economic gloom stifles significant Sterling movement.
Today’s disappointing manufacturing PMI report serves to undermine the Bank of England’s (BoE) increasingly hawkish stance towards monetary policy, amid signs that the UK economy remains highly stagnant.
While the finalised index reading reported a notable increase to 47.2 in November, up from last month’s 44.8, the manufacturing sector contracted for a sixteenth consecutive month.
Glynn Bellamy, UK Head of Industrial Products for KPMG observed that there was little upside to today’s index as manufacturers remain under significant economic pressure:
‘A slowdown in inflation and a pause in interest rate hikes has slightly eased the pressure on manufacturers, but costs remain high in relative terms. Manufacturers exposed to weaker consumer demand, from both domestic and export markets, continue to suffer most from new order downturn, with post-pandemic destocking also a factor.
Euro (EUR) Stumbles on Eurozone PMI
The Euro (EUR) is wavering today as concerns about the health of the Eurozone’s economy persist.
While the Eurozone’s latest manufacturing PMI came in higher than expected, EUR sentiment remains sour today.
The index printed at 44.2 in November, up from last month’s reading of 43.1, and beating expectations of 43.8. Despite rising to a six-month high, the index remained well below 50, placing the manufacturing sector deep in contraction territory for a seventeenth consecutive month.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, affirmed ongoing concerns for the Eurozone’s sluggish economy, noting increasingly lacklustre data reports:
‘November has not been the prettiest, and this does not refer only to the weather but also to the situation in the manufacturing sector of the euro zone. Sure, almost all the sub-indices have perked up a bit. However, the improvements are mostly timid, lacking the dynamism needed to declare an upward trend.’
While the Eurozone continues to skirt with recession, November’s gloomy PMIs serve to further sour EUR sentiment today, leaving the common currency at risk of further selling pressure throughout Friday’s session.
Pound Euro Exchange Rate Forecast: German Trade in Focus
Looking ahead, Germany’s latest trade data is due out on Tuesday and may drive EUR movement. The industry-heavy German economy is forecast to see a minor uptick in German trade surplus, which may offer the Euro some support amid signs of increasing economic activity. An increasingly bleak German economy may garner investor interest upon signs of economic revival.
On Tuesday, the UK’s finalised services PMI is due for release. Economists expect to see an expansion to 50.5 in the vital services sector, breaking out of contraction territory after three consecutive months of decline. Should the index print in line with expectations, following on from last week’s estimate, an uptick in UK economic activity may serve to restore Sterling sentiment.
In the meantime, the Pound Euro exchange rate may be left vulnerable to any shifts in market mood. The increasingly risk-sensitive Pound could edge higher against the safe-haven EUR, should cheery trade permeate global markets. However, cautious trade may see GBP slump against its safer peers.