Pound euro exchange rate dips following better-than-expected data from the Bloc
The pound euro (GBP/EUR) exchange rate has edged lower this morning following the publication of the Eurozone’s finalised manufacturing PMI for October.
At the time of writing, GBP/EUR is trading at around €1.1890, down roughly 0.3% from this morning’s opening levels.
Euro (EUR) firms following Eurozone PMI data
The euro (EUR) is managing to tick up against the majority of its peers this morning following the release of the Eurozone’s latest manufacturing PMI data.
Although October’s finalised index remained within the contraction zone (a reading below 50) the index printed above market expectations and rose from 45.0 to 46.0, slightly ahead of a more modest 45.9 expectation.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, explains last month’s results:
‘There is one bit of good news in these numbers: the recession in the manufacturing sector did not deepen further in October. (However), production dropped at a slower pace than in the previous month, and new orders fell less sharply.’
The single currency has been buoyed not by this morning’s upbeat data reading, but by a declining US dollar (USD) thanks to the euro’s negative correlation with the ‘greenback’.
As the US’s general election begins tomorrow, alongside the Federal Reserve’s latest interest rate decision on Thursday, markets seem reluctant to place any bets on the American currency which in turn has seen EUR exchange rate strengthen.
Pound (GBP) holds steady despite lull in data
The pound (GBP) is holding steady against the majority of its peers this morning despite a quiet start to this week’s UK data-calendar.
Despite the absence of economic drivers, GBP exchange rates are managing to remain above water this morning, marginally underpinned by last week’s fall in Bank of England (BoE) interest rate cut bets.
Following the UK Chancellor’s Autumn Budget, that was delivered towards the end of last week, BoE rate cut bets have diminished on the back of hopes that the recent budget could fuel inflation and in turn slow down the pace of monetary policy reduction.
This, alongside a cautiously upbeat market mood, has lent the increasingly risk-sensitive currency some modest support this morning amid a lack of domestic data.
Pound euro exchange rate forecast: UK data to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking at tomorrow will likely be the publication of some domestic UK data.
The UK will release its finalised services PMI for October which could see GBP exchange rates begin Tuesday’s session on the back foot should the data confirm a drop in the country’s vital services sector.
Turning to the euro, the only data release of note will be delivered in the form of a speech from the European Central Bank’s (ECB) President Christine Lagarde.
Lagarde’s upcoming speech could infuse volatility into the single currency should her speech contain any dovish comments surrounding the future of monetary policy.