Pound euro (GBP/EUR) ticks up amid risk-on flows
(Updated 14:00, 24/10/24) The pound euro (GBP/EUR) exchange rate is trending marginally higher moving into this afternoon’s European session as market appetite for risk underpinns the curreny pairing.
As an increasingly risk sensitive currency, the pound (GBP) is being supported by market optimism, while the euro (EUR) has remained on the back foot thanks to its status as a safe-haven currency.
At the time of writing, GBP/EUR is trading at around $1.2018, up roughly 0.3% from today’s opening levels.
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Pound euro exchange rate rangebound in the wake of PMI data
The pound euro (GBP/EUR) exchange rate is trading mostly flat this morning following the publication of both the UK’s and the Eurozone’s latest PMI data.
At the time of writing, GBP/EUR is trading at around €1.1993, virtually unchanged from this morning’s opening levels.
Pound (GBP) unchanged following downbeat UK PMIs
The pound (GBP) is treading water against the majority of its peers this morning following the publication of the UK’s preliminary PMI data for October.
Both the manufacturing and services indices came in lower than expected this month, however, both remained within the expansion zone (a reading above 50).
The UK’s manufacturing sector dipped from 51.5 to 50.3 rather than a more modest 51.4 expectation, confirming a six-month low.
Similarly, the UK’s services sector fell from 52.4 down to 51.8 this month, below forecast it would remain the same.
The all-important services-sector confirmed the lowest reading in almost a year, reflecting the business sector’s concern over the UK’s upcoming Autumn Budget.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented:
‘Business activity growth has slumped to its lowest for nearly a year in October as gloomy government rhetoric and uncertainty ahead of the Budget has dampened business confidence and spending. Companies await clarity on government policy, with conflicts in the Middle East and Ukraine, as well as the US elections, adding to the nervousness about the economic outlook.’
Euro (EUR) undermined by PMIs
The euro (EUR) is dipping against the majority of its peers this morning following the publication of some underwhelming domestic data.
The latest PMI index for October revealed that, although the Eurozone’s manufacturing sector rose from 45.0 to 45.9 and hit a five-month high, the index remained firmly within the contraction zone (a reading below 50).
The latest services index printed below market forecasts for the same time period, remaining within the expansion zone but dipping from 51.4 to 51.2 rather than rising to 51.5 as expected.
As the data confirmed an overall second month of contraction, this has hobbled the single currency in the wake of the release.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented:
‘The Eurozone is stuck in a bit of a rut, with the economy contracting marginally for the second month running. The ongoing slump in manufacturing is being mostly balanced out by small gains in the service sector. At the country level, it can be noted that the deterioration of the situation in France was met by a slight moderation in the decline in Germany. For now, it is not clear whether we will see a further deterioration or an improvement in the near future.’
Pound euro exchange rate forecast: German data in the spotlight?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking at tomorrow will likely be the publication of some high impact data from Germany.
The latest IFO business climate from Germany could see the Euro slump tomorrow as the index is forecast to only marginally rise from last months nine-month low.
Similarly, the Eurozones latest consumer confidence index could also act as a headwind to the common currency as the data is forecast to remain near Augusts’ three year low.
Turning to the pound, the only data release of note on Friday will come in the form of the UK’s latest GFK consumer confidence index.
The data is forecast to remain near a six-month low stuck last month as the UK continues to await the nervously anticipated Autumn Budget.