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Euro Pound Sterling (EUR/GBP) Exchange Rate Muted as German Construction Hits a ‘Speed Bump’

Euro Pound (EUR/GBP) Exchange Rate Flat as German Construction PMI Slides from 14-Month High

The Euro Pound Sterling (EUR/GBP) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of £0.8559.

The German construction PMI revealed that construction activity growth slipped in April as there was a slower rise in new orders.

The PMI edged down to 53, the lowest reading since January and firms’ optimism softened to a four-month low.

However, this was still significantly higher than the long-run average of 47.8.

Commenting on the data, Principal Economist at IHS Markit said:

‘Germany’s construction sector hit a bit of a speed bump in April, as growth slowed from the strong rate seen at the end of the opening quarter. Falling from a 14-month high of 55.6 in March to 53.0, the modest correction in April still leaves the headline PMI at a healthy level by historical standards.’

Sterling (GBP) Muted as Pressure on PM to Resign Increases

Prime Minister Theresa May is due to meet Chairman of the 1922 Committee, Sir Graham Brady amid further calls for her resignation.

While it has been insisted by Downing Street that the meeting is routine, it has been suggested that May will be pressed for a timetable of her departure.

This comes following a request from the Committee for ‘clarity’ on the issue of the Prime Minister’s departure.

This likely weighed on Sterling, leaving the pairing muted.

Euro (EUR) Flat as German Domestic Factory Orders Slide

German factory orders rose less than forecast, edging up by 0.6% in March.

This was the largest rise in orders since August 2018.

While orders for consumer goods led the rebound, the report suggested that the Germany economy was a large area of weakness.

Total domestic orders fell by 4.2%, while export demand jumped by 4.2% which likely weighed on the single currency.

Euro Pound Outlook: Will the EUR/GBP Slide on a Dovish Draghi?

Looking ahead to Wednesday, the Euro (EUR) could slide against Sterling (GBP) following the release of the German industrial production figures.

If industrial production slides further than expected in March, sentiment in the single currency could be dampened.

Later in the day, President of the European Central Bank (ECB) Mario Draghi is due to give a speech which could cause the Euro to slip further.

If Draghi’s tone is overly dovish, hinting that there could be an interest rate cut in future, the Euro Pound (EUR/GBP) exchange rate could slide.