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Euro Pound (EUR GBP) Climbs as Eurozone Economic Activity Outpaces Expectations

The Euro Pound (EUR GBP) exchange rate surged from a weekly low this morning as markets were impressed by the Eurozone’s latest PMI estimates.

Euro (EUR) Strengthened as PMI Data Impresses

The Euro jumped this morning as the latest Eurozone PMI data suggested that the bloc saw a strong rise in economic activity this month.

According to figures published today by IHS Markit the Eurozone’s latest Manufacturing PMI estimate jumped from 57.4 to 58.2 this month, while the Services PMI leapt from 54.7 to 55.6.

Investors were particularly impressed by the surge in manufacturing activity as the index climbed to its highest levels since February 2011, as the Eurozone’s factories were buoyed by a strong rise in exports.

The uptick in activity this month also caused analysts to suggest that the Eurozone will have enjoyed another period of bumper growth in the third quarter.

Chris Williamson, chief business economist at IHS Markit said;

‘The Eurozone economy ended the summer with a burst of activity, with the PMI signalling renewed impetus to already-impressive rates of growth of output, order books and employment during September.’

‘The survey data point to 0.7% GDP growth for the third quarter, with accelerating momentum boding well for a buoyant end to the year.’

Meanwhile today’s upbeat data also drove further speculation that the European Central Bank (ECB) may seek

Pound (GBP) Investors Brace for PM’s Brexit Speech

Sterling meanwhile struggled to hold on to its recent gains this morning as investors become increasingly cautious ahead of a key Brexit speech by Prime Minister Theresa May in Florence later this afternoon.

The PM is understood to be using the speech today to set out her proposals for a transitional deal with the EU.

May is expected to seek and agreement which would likely see the UK remain within the single market for a two-year period after the conclusion of negotiations in March 2019.

In exchange the PM is expected to offer a €20 cash payment to help ensure that there is no shortfall in the EU’s current budget following the UK’s departure.

It is also hoped that the payment will also help break the current deadlock in Brexit negotiations, which have stalled recently over disagreements on the size of the UK’s ‘divorce’ bill.

EUR GBP Forecast: EU to Dismiss May’s Speech?

Looking ahead movement in the EUR GBP exchange rate later today will of course be dependent on the reaction to May’s speech.

The PM will have to impress both investors and EU officials with her proposals this afternoon a she must strike a balance between seeking the best deal possible for the UK’s economy and winning over sceptical EU leaders with meaningful concessions.

Current Interbank Exchange Rates

At the time of writing the EUR GBP exchange rate was trending around 0.8845 and the GBP EUR exchange rate was trending around 1.1302.