After falling dramatically on Thursday the Euro Pound exchange rate was preparing to close out the week trading lower, but we could still see further shifts in EUR/GBP.
- EUR drops to 0.84 against GBP – -1% Drop recorded for Euro
- Eurozone August PMIs disappoint – Manufacturing losses seen in finalised results
- Pound skyrockets after UK manufacturing PMI – Surprise jump into growth
An upbeat UK Manufacturing PMI sent the Euro Pound exchange rate around 1% lower towards the close of the week, and the common currency failed to recover ground after the UK’s Construction PMI also beat forecasts.
While the measure didn’t return to growth territory, the reading of 49.2 was considerably better than the forecast result of 46.5 and the previous month’s reading of 45.9.
If next week’s UK Services PMI also exceeds expectations, we could see the EUR/GBP exchange rate hit new lows.
The UK services sector accounts for the majority of total economic output and the gauge printed in contraction territory at 47.4 in July. A return to growth in August would indicate that the UK has bounced back from its initial Brexit slump and could give the Pound a serious boost.
The Eurozone’s Producer Price Index came in at 0.1% on the month in July, as expected, but an annual reading of -2.8% was better than the -2.9% result projected.
As it stands, EUR/GBP is trading in the region of 0.8429.
(Previously updated 01/09/2016)
The Euro has fallen heavily against the Pound today due to bullish UK data, while in other pairings, the single currency has fared poorly after falling Eurozone manufacturing PMIs. Upcoming Eurozone data before the weekend will focus on Spanish unemployment as well as Italy’s GDP printings.
The Pound has found itself in extremely high demand during today’s European trading session, having been sent soaring in appeal by better-than-expected manufacturing PMI results. Friday will bring further UK PMI data, which may trigger a repeat performance of today’s Sterling rally.
Eurozone Economic News: Euro Declines as Manufacturing PMIs Slide for August
The Euro has collapsed against its regular peers for the most part today, having been hit by a string of declining finalised manufacturing PMI results for August.
Among the losses seen today have been slides of -0.3% against the Australian Dollar (EUR AUD), -0.5% against the South African Rand (EUR ZAR) and -1% against the Pound (EUR GBP).
The PMIs in question included a slip from 53.8 to 53.6 for Germany’s index, as well as a decline from 52 to 51.7 for the Eurozone measure.
Responding to the news, Markit Chief Business Economist Chris Williamson said;
‘Once again, it’s also a worryingly mixed picture across the region. Northern countries including Germany, the Netherlands and Austria are providing the main power to the expansion, but elsewhere the picture is looking more subdued. France and Italy are in decline, Greece is stagnating and both Spain and Ireland are enduring their worst growth spells since mid-2013’.
Pound Sterling Rallies after Surprise Growth Figure is Seen for UK Manufacturing
The Pound has made an unexpected jump against its regular peers today, with some of its many gains including 1% against the Euro (GBP EUR) and the Danish Krone (GBP DKK) as well as 1.1% against the Swiss Franc (GBP CHF) and the Hungarian Forint (GBP/HUF).
The source of this immense positivity has been the Markit manufacturing PMI for August, which has unexpectedly soared from 48.3 points to 53.3, showing growth in the sector instead of contraction.
This is especially significant as it shows a rapid sector-wide recovery since the EU Referendum, which caused a dive into contraction in July.
Future EUR GBP Forecast: Spanish Unemployment Stats and High-Impact UK Construction PMI due Tomorrow
The next data likely to influence the EUR GBP pairing will come from the Eurozone, when the Spanish unemployment change for August is announced; this has been forecast to show a drop of -49.7k.
Additional Eurozone input will come from Italy’s Q2 finalised GDP growth rate figures, which are forecast to drop on both the quarter and the year.
Closing off the week’s main EUR GBP exchange rate movement will be the UK construction PMI result for August, which is expected to rise from 45.9 to 46.6; this will still leave the figure in the contraction range.
Current EUR, GBP Exchange Rates
The Euro Pound (EUR GBP) exchange rate was trending in the region of 0.8410 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.1892 today.