Pound euro exchange rate flat following PMIs
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of both the UK’s and the Eurozone’s finalised manufacturing PMIs for August.
At the time of writing, GBP/EUR is trading at around €1.1868, virtually unchanged from this morning’s opening levels.
Pound (GBP) holds steady amid upbeat PMI
The pound (GBP) is managing to stay above ground against the majority of its peers this morning as it is being supported by the UK’s finalised manufacturing PMI for August.
The latest index confirmed that the sector remained in the expansion zone (a score above 50), and printed in line with market expectations at 52.5, coming in at just over a two-year high.
The data highlighted the ongoing strength of the UK’s manufacturing sector, buoying GBP exchange rates despite this morning’s risk-off flows.
Rob Dobson, Director at S&P Global Market Intelligence commented:
‘The UK manufacturing sector remained a positive contributor to broader economic growth in August. The headline PMI hit a 26-month high of 52.5, reflecting solid expansions in output and new orders and the strongest jobs growth for over two years. The upturn is broadbased across manufacturing, with the investment goods sector the stand-out performer.’
Euro (EUR) remains above ground despite underwhelming PMI
The euro (EUR) is also managing to stay afloat against the majority of its peers this morning, and is firming against several of its riskier assets, despite a disappointing manufacturing PMI print.
The finalised manufacturing index for August confirmed that the sector remained in contraction territory (a score below 50), with the index printing in line with market expectations at 48.5.
The data also confirmed the lowest reading in an eight-month period while also highlighting over two consecutive years of decline in the bloc’s manufacturing sector.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented on the release:
‘Things are going downhill, and fast. The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a gruelling 26 months and counting. New orders, both domestic and international, are slowing down even more, dashing any short-term hopes for a rebound.’
However, the euro was seemingly supported by a cautious market mood, as the safe-haven currency managed to attract investor attention regardless.
Pound euro exchange rate forecast: mid-tier data to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate tomorrow will likely be a mid-tier data release from the UK, in the form of the British Retail Consortium’s latest retail sales monitor.
August’s index could lend Sterling some modest support tomorrow should the data report an increase in the figures as expected.
Turning to the euro, amid an absence of economic data releases, the single currency could experience volatility following a speech from European Central Bank member Kerstin af Jochnick.
GBP/EUR could also be driven by market mood, with upbeat trade likely to underpin the exchange rate while cautious trade could see GBP/EUR falter.