Pound euro (GBP/EUR) exchange rate muted despite upbeat PMIs
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the final services PMI data from both the UK and the Eurozone earlier this morning.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1658, virtually unchanged from this morning’s opening rate.
Pound (GBP) wavers as PMI data misses forecasts
The pound (GBP) is trading in a wide range against its peers this morning following the release of some mixed UK PMI data.
The finalised service sector reading came in at 53.1, down from February’s reading of 53.8, and slightly below forecasts of a more modest fall to 53.4.
Although March’s reading came in slightly below forecast, which is capping the pound’s movement, the sector has remained firmly above the 50-point mark that indicates growth. This has managed to underpin GBP exchange rates in the aftermath of the release.
Further aiding Sterling this morning is a bout of cheery trade. On the back of its position as an increasingly risk-sensitive currency, the pound is enjoying modest support amid the upbeat trading conditions.
Euro (EUR) mixed following latest PMIs
The euro (EUR) is fluctuating against its peers this morning, rising by as much as 0.5% against some of its counterparts but faltering elsewhere, despite the release of some better-than-expected domestic PMI data.
In March, the Eurozone’s services PMI printed at 51.5, coming in above market expectations it would only rise to 51.1 from February’s 50.2 reading.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented:
‘Finally some good news again. The service sector in the eurozone is gradually finding its footing, with activity stabilizing in February and showing signs of moderate growth in March. It’s particularly encouraging to note that new business has resumed growth after an eight-month dry spell. This favourable trend is expected to persist, fuelled by wage growth outpacing inflation, thus bolstering the purchasing power of households.’
Despite this positive services reading, the Euro remains volatile as an upbeat market mood has set out to cap the single currency’s potential gains.
Pound euro exchange rate forecast: Eurozone data to infuse volatility in the euro?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate for the remainder of the week is likely to be several data releases from the Eurozone.
On Friday, Germany’s latest factory orders are expected to report a rebound in February. As factory orders slumped 11.3% in the Eurozone’s largest economy last month, February’s predicted 0.8% expansion could lend the euro some support.
Following that, the Eurozone’s latest retail sales are expected to shrink in February, forecast to fall by 0.4% Should the data match expectations, this could undermine the common currency at the end of this week.
Turning to the pound, a lack of UK data releases scheduled for the remainder of the week may leave Sterling vulnerable to the ever-shifting market mood, and could see GBP exchange rates firm should markets remain upbeat.