Pound Euro (GBP/EUR) Exchange Rate Subdued despite Upbeat UK Services PMI
The Pound Euro (GBP/EUR) exchange rate is rangebound this morning, despite the latest UK services PMI printing above expectations.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1599, virtually unchanged from this morning’s opening rate.
Pound (GBP) Buoyed by Rise in Services PMI
While the Pound (GBP) is muted against the Euro (EUR), it is ticking up against its other peers today, following the release of December’s UK services PMI.
The data confirmed the UK service sector continued to recover in December, climbing to a six-month high.
The services index rose to 53.4 in December, up from November’s 50.9 and above market expectations of 52.7, making this the second consecutive month of growth in the UK service sector.
Tim Moore, Economics Director at S&P Global Market Intelligence, commented:
‘December’s data indicated that the UK service sector ended last year on a high, with business activity growth accelerating to its fastest for six months as the turnaround in order books gained momentum. The recovery in client demand was attributed to hopes of lower borrowing costs and an improving global economic backdrop in 2024.’
The rise in the service sector could continue to aid Sterling as markets have time to digest the data.
Euro (EUR) Flat ahead of German Inflation Data
The Euro (EUR) is trading sideways this morning, as markets await Germany’s latest inflation figures before placing any aggressive bets.
Experts are predicting a rise in headline inflation and forecast it will have accelerated from 3.2% to 3.7% in December.
This would be the first increase in inflationary pressures in seven months and may boost the Euro if it weakens speculation that the European Central Bank (ECB) will cut interest rates in the first half of 2024.
Pound Euro Exchange Rate Forecast: Uptick in Eurozone Inflation to Buoyed EUR??
Looking ahead, the Pound Euro exchange rate could face some pressure tomorrow, with the release of the Eurozone’s inflation figures for December.
Headline inflation is predicted to jump from 2.4% in November, up to 3% for this reading, whereas core inflation is expected to slightly cool, from 3.6% to 3.5% for December.
Should headline inflation print in line with expectations, it could boost the Euro at the end of the week as it would further encourage the European Central Bank to leave interest rates on hold for longer.
Turning to the Pound, a lull in notable UK data in the coming days will leave Sterling sensitive to market sentiment. Should market mood improve in the latter stages of the first week of 2024, this may lend the risk sensitive Pound some support.