- Euro holds fast against most peers – Moderate gains and losses recorded so far
- Eurozone manufacturing falls in July – France and Greece display contraction
- Pound slides as UK manufacturing disappoints – Clear movement into contraction range recorded
- Irish central bank governor to speak tomorrow – UK to release more July PMI printings
The Euro has remained steady so far this week, despite concerning Eurozone manufacturing data.
The Pound has flopped overall, as the condition of the UK economy after the EU Referendum has been shown in an alarming light.
Subsequently, the Euro Pound (EUR/GBP) exchange rate has spent the week so far trending in a fairly narrow range, fluctuating between highs of 0.8486 and lows of 0.8410. With investors fixated on this week’s potentially influential BoE interest rate decision, the Pound has been the main driver of movement in the pairing.
Eurozone Economic News: Euro Weathers Wide Decline in Manufacturing PMIs
The Euro has been a comparatively more desirable currency than the Pound recently, though both the Eurozone and the UK have been hit with poor PMI results for manufacturing in July.
In the former case, Spain, Italy, Germany, Greece and the Eurozone as a whole have seen declines in their manufacturing results; France has been the exception with a rise from 48.3 to 48.6, though this outcome still sees the nation’s manufacturing sector in a bad way.
Commenting on the news, Markit Chief Economist Chris Williams said;
‘The problem is that growth is looking increasingly lop-sided, which will worry policymakers and add to calls for further stimulus from the European Central Bank’.
Notable Euro movements of late have been gains of 0.6% against the Australian Dollar (EUR AUD) and a smaller advance against the Pound (EUR GBP), along with losses of -0.2% against the Indian Rupee (EUR INR) and -0.6% against the South African Rand (EUR ZAR).
Pound Sterling Crashes as UK Manufacturing PMI Shows Worse-than-Expected Result
The Pound has fallen heavily on the first day of a major week for the UK, which bodes poorly for the remaining high-impact UK data.
Opening off movement has been the finalised Markit/CIPS manufacturing PMI for July, which has recorded a drop from 52.1 to 48.2.
While July’s earlier PMI flash had forecast a negative outcome, the actual lower figure has only heightened anxieties among investors, particularly in the context of other UK data due out this week.
In comments attached to Markit’s release of the data, Senior Economist Rob Dobson said;
‘The weakening order book trend and upswing in cost inflation point to further near-term pain for manufacturers. On that score, the weak numbers provide powerful arguments for swift policy action to avert the downturn becoming more embedded and help to hopefully play a part in restoring confidence and driving a swift recover’.
Among the Pound’s losses recently have been minor declines against the Euro (EUR EUR) and US Dollar (GBP USD) and greater slumps of -0.6% against the Turkish Lira (GBP TRY) and -0.7% against the Mexican Peso (GBP MXN).
Future EUR, GBP Forecast: CBI Governor to Speak Tomorrow, Poor UK PMI Result Expected
The next major economic announcement to affect the EUR GBP pairing will come tomorrow morning, when the UK’s July construction PMI is set to be announced.
As of writing, forecasts have been extremely pessimistic, with further movement into the contraction range on the cards, from 46 to 45.2.
A less impactful development is set to come later on, in the early afternoon.
Central Bank of Ireland (CBI) Governor Philip Lane is expected to make a speech, though given how prominent the European Central Bank (ECB) is in the Eurozone, any dovish or hawkish statements from Lane may not have much impact.
Current EUR, GBP Exchange Rates
The Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8464 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1815 today.