The Euro softened against the Pound on Thursday due to the release of stronger-than-expected UK manufacturing data which raised expectations that the Bank of England could raise interest rates sooner than forecast.
Sterling experienced a rally after the latest Markit UK manufacturing purchasing managers index increased more than forecast. The index climbed to 57.3 in April, beating expectations for a decline to 55.4. The figure was also higher than March’s figure of 55.8 and was the highest reading recorded since November last year.
The survey raised expectations that manufacturing growth in the second quarter could increase by more than 1.5%, to add to the 1.3% surge seen in the first quarter. The report also showed that manufacturers created around 10,000 new jobs per month.
Any figure above the 50 mark indicates growth whereas a figure below indicates contraction.
“The domestic market remains the dominant driver of manufacturing activity, although there are some encouraging signs from a rise in export flows that the gradual revival in Eurozone demand is beginning to feed through to manufacturers’ order books,” said the deputy chief economist at EEF.
As a result of the data the Pound is trading close to its highest level in five years.
The Euro meanwhile found support from manufacturing data out of Ireland and the Netherlands with both nations seeing manufacturing growth.
The single currency was also supported by speculation that yesterday’s rise in Eurozone inflation would prove to be enough to prevent the European Central Bank from introducing new monetary policy measures in order to tackle the threat from deflation.
The Euro is likely to experience movement on Friday due to the release of Eurozone unemployment and manufacturing data. If the reports come in positively then the Euro is likely to push higher against its major peers.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3880 ,
Euro,,British Pound,0.8206 ,
Euro,,Australian Dollar,1.4951 ,
Euro,,Canadian Dollar,1.5228 ,