Pound euro (GBP/EUR) exchange rate flat despite upbeat UK PMIs
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of the UK’s and the Eurozone’s preliminary PMIs.
At the time of writing, GBP/EUR is trading at around €1.1902, virtually unchanged from this morning’s opening levels.
Pound (GBP) underpinned by services growth
The pound (GBP) is holding steady against the majority of its peers this morning following the publication of the UK’s latest PMIs.
The UK’s preliminary index reported that the services sector continued to grow in July, with the index rising from 52.1 to 52.4, while the manufacturing index rose from 50.9 to 51.8.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented:
‘The flash PMI survey data for July signal an encouraging start to the second half of the year, with output, order books and employment all growing at faster rates amid rebounding business confidence, while price pressures moderated. The first post-election business survey paints a welcoming picture for the new government, with companies operating across manufacturing and services having gained optimism about the future.’
Signs of further recovery within the UK economy has spurred domestic optimism, ultimately underpinning GBP exchange rates this morning.
Euro (EUR) dips following PMIs
The euro (EUR) is on the defensive against the majority of its peers this morning following the publication of the Eurozone’s preliminary PMIs.
Both the services and manufacturing indices came in below forecast in July, undermining the single currency this morning.
The Eurozone’s services index fell from 52.8 to 51.9 rather than rising to 53 as expected, and marked the lowest reading in a five-month period.
Similarly, the manufacturing index fell from 45.8 to 45.6 rather than rising to 46.1, printing at a year-to-date low..
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented:
‘Is this the summer lull? It feels a bit like it as the Eurozone economy barely moved in July, according to the HCOB Flash Eurozone PMI. But beside the fact that we are talking about seasonally adjusted figures, looking at the two monitored sectors the situation deteriorated significantly.’
Pound euro exchange rate forecast: German data to drive movement?
Looking ahead, the likely driver of movement for the pound euro exchange rate tomorrow will be the publication of Germany’s latest IFO business climate.
Will an expected uptick in business confidence this month underpin EUR towards the latter stages of the week?
Or will another below forecast confidence reading from the Eurozone’s largest economy serve to undermine the euro further.
Turning to the Pound, market moving data will be absent for the reminder of the week, which could leave the Pound struggling to find a clear direction.
The GBP/EUR exchange rate could also be driven by market mood. Should markets opt for safer assets, the GBP/EUR exchange rate could be undermined.