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Euro pound (EUR/GBP) rangebound amid UK manufacturing downturn

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Euro pound (EUR/GBP) rangebound as UK PMI disappoints

The euro pound (EUR/GBP) exchange rate is trading without a clear direction this morning as the UK’s finalised manufacturing PMI fell short of expectations, while Eurozone market closures limit the common currency’s movements. 

At the time of writing the EUR/GBP exchange rate is trading at €0.8547, virtually unchanged from this morning’s opening rate.         

Pound (GBP) wavers amid disappointing PMI

The pound (GBP) struggles to edge higher this morning following a disappointing finalised manufacturing PMI in the UK.

The index printed at 48.7 in April, returning to contraction territory following a brief upturn to 50.3 in March. Markets had anticipated another month of growth in the manufacturing sector, with recent preliminary figures estimating a score of 50.3 in April.

However, a decline in new orders saw yet another downturn in UK factory output, serving to stymie GBP’s movements this morning.

Rob Dobson, Director at S&P Global Market Intelligence, said:

‘The sector is still besieged by weak market confidence, client destocking and disruptions caused by the ongoing Red Sea crisis, all of which are contributing to reduced inflows of new work from domestic and overseas customers, with specific reports of difficulty securing new contract wins from Europe, the US and Asia.’

Euro (EUR) muted amid market closure

The euro (EUR) is fluctuating today as European markets close in observance of Labour Day.

Thin trading conditions leave EUR rudderless against its major peers, with little notable movement likely to take place throughout the remainder of the session.

As such, high impact US data could serve to imbue EUR with some volatility, due to the US dollar and euro’s negative trading correlation.

The latest American ISM manufacturing PMI is due for release this afternoon, alongside the latest US JOLTs job openings. The weighty releases are set to reveal softening factory activity as well as loosening US employment, which in turn could see the common currency edge slightly higher upon a weakening US dollar.

However, with Euro bloc markets out of action for the remainder of the session, EUR will likely trade without a clear direction for much of the afternoon.

Euro pound exchange rate forecast: Eurozone jobs data to boost EUR?

Coming up, the next notable release for the Euro bloc arrives on Friday with the Eurozone’s latest unemployment figures. Economists forecast that the unemployment rate will have held at 6.5% in March, holding near record lows. This could see the common currency garner some investor support as signs of continually robust employment provide the European Central Bank (ECB) with further space to maintain its current base rate.

Looking to the pound, a lack of notable releases could bring the UK’s finalised services PMI into focus on Friday. Should the index confirm a notable expansion to 54.9 in the vital sector, GBP could catch some bids.

Otherwise, market risk dynamics drive additional movement in the euro pound exchange rate in the meantime. The increasingly risk-sensitive pound could strengthen amid cheery trading conditions, whereas an anxious market sentiment could see EUR take precedent.