EUR/GBP exchange rate flat following PMIs
The euro pound (EUR/GBP) exchange rate is trapped in a narrow range today following the publication of the latest UK and Eurozone PMI data.
At the time of writing, the EUR/GBP exchange rate is trading at around €0.8616, virtually unchanged from this morning’s opening rate.
Euro (EUR) fluctuates following PMI data
The euro (EUR) is trading in a wide range today, muted against the majority of its peers however is managing to firm against its risk-sensitive counterparts, following the release of the Eurozone’s latest PMI data.
April’s reading printed somewhat mixed, as both the services and manufacturing figures deviated from predictions.
The flash services PMI came in above expectations and printed at 52.9, rising from a previous reading of 51.5 and beat forecasts of a more modest 51.8.
The preliminary manufacturing index reported a drop in this month’s reading, falling from 46.1 to 45.6, and came in below predictions of a 46.6 reading.
Cyrus De La Rubia, Chief Economist at Hamburg Commercial Bank commented:
‘The Eurozone got off to a good start in the second quarter. The Composite HCOB Flash PMI took a significant step into expansionary territory. This was propelled by the services sector, where activity has gathered further steam.’
However, despite the seemingly upbeat data reading, the euro is struggling to drift higher today.
Pound (GBP) supported by Services PMI
Whilst the pound (GBP) remains flat against the euro, is it strengthening against the majority of its counterparts in the wake of the UK’s preliminary PMI reading.
Although the UK’s data followed a similar path to that of the Eurozone’s release, an unexpected surge in the UK services sector has served to underpin GBP exchange rates through the first half of today’s European session.
The services index increased from 53.1 to 54.9 in April, and skyrocketed past a more modest expectation of 53, whilst the manufacturing sector printed below expectations and fell from 50.3 to 48.7, dropping the sector back in contraction territory (printing under the 50 level that marks expansion).
Chris Williamson, chief business economist at S&P Global Market Intelligence, says:
‘Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum. Improved growth in the service sector offset a renewed downturn in manufacturing to propel overall business growth to the fastest for nearly a year, indicating that GDP is rising at a quarterly rate of 0.4% after a 0.3% gain in the first quarter.’
With suggestions that UK inflation could be sticker than expected, Sterling has managed to enjoy some moderate success today.
EUR/GBP forecast: German data in the spotlight?
Looking ahead, the primary catalyst of movement for the EUR/GBP exchange rate for the rest of the week will likely be several data releases from the Eurozone’s largest economy.
On Wednesday, Germany’s latest IFO business climate is predicted to report a marginal increase in April, which could lift EUR exchange rates in mid-week trade.
On Thursday, business confidence in the Germany is expected to show another fall in May’s figures, which could in turn hobble the single currency towards the end of the week.
Turning to the pound, a lack of significant UK data could see Sterling trade without a clear direction for the remainder of the week.
