The Euro to Pound (EUR/GBP) pairing strengthened on Tuesday to 0.8287 and is forecast to push higher as the session progresses due to the release of a number of Euro positive data releases and as disappointing UK manufacturing data weighs upon Sterling.
Unemployment across the Eurozone in February remained at 11.9% and the regions Manufacturing PMI for March matched economist expectations for a figure of 53.
The Euro found support after data showed that France’s factory sector posted its biggest growth in output in 33 months and returned to growth for the first time in two years. The data eased some of the concerns over the regions second biggest economy. The French PMI leapt from 49.7 to 52.1, the best reading seen since 2011. Employment also rose slightly.
Italy followed Spain in seeing a rise in factory output with its PMI rising to 52.4 in March. Despite the improvement unemployment remained unchanged. Growth in Spain meanwhile saw its fastest rate in four years as the nation continues to recover from recession. Unemployment remains close to record highs however.
Taking the shine off of those reports was Germany which saw a slowdown. Today’s data suggests that the Eurozone recovery is beginning to balance out as the more worse off nations start to recover.
Concerns regarding inflation however were not helped as manufacturers reported the first cuts in prices at which they sell their goods since August 2013.
The overall Eurozone manufacturing PMI softened to 53, down from the 53.2 recorded in February.
The Pound was weakened by the release of its own PMI data which showed that export demand fell to the worst level in 10-months. The UK manufacturing PMI fell to 55.3, its lowest level since July.
“The old criticisms still apply, with the survey signalling a downturn in export growth and an expansion that is all-too reliant on domestic consumers. However, the very fact that we have a healthy manufacturing economy that is generating jobs at a rate rarely seen in recent decades suggests that the rebalancing process is underway.
We may be still a consumption-oriented economy in many respects, but at least we now appear to be producing more of the goods we sell ourselves, which is a more sustainable situation to be in,” said Rob Dobson from Markit.
As with all PMI data a figure above 50 indicates expansion, whereas one below indicates contraction.
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3791 ,
Euro,,British Pound,0.8287 ,
Euro,,Australian Dollar,1.4887 ,
Euro,,Canadian Dollar,1.5270 ,