This can be attributed to improved manufacturing in Germany and the Eurozone supporting a Euro appreciation. The Pound, meanwhile, is generally trending lower against the majority of its most traded currency competitors after British manufacturing data disappointed.
The Euro to Pound sterling exchange rate is currently trending in the region of 0.7805.
Euro (EUR) Exchange Rate Strengthens on Eurozone Manufacturing
Although European data produced a mixed-bag of results on Friday, the improvement in the German and Eurozone Manufacturing PMIs have aided a shared currency appreciation. German Manufacturing ticked higher from 49.5 to 51.2, a significant improvement as it showed production moved away from contraction and into growth. The Eurozone Manufacturing PMI increased from 50.1 to 50.6.
Chris Williamson, Chief Economist at Markit said; ‘Eurozone factory activity more or less stagnated again in December, rounding off a year which saw an initial, promising-looking upturn fade away and stall in the second half of the year. The weakness of factory output, combined with the subdued service sector growth signalled by the flash PMI, suggests the Eurozone economy grew by just 0.1% in the fourth quarter.’
The Euro to Pound Sterling exchange rate dropped to a low today of 0.7743.
Pound Sterling (GBP) Exchange Rate Declines on Manufacturing
In contrast to that of the shared currency, the Pound softened against its major peers after manufacturing data failed to impress. The UK Manufacturing PMI softened from 53.5 to 52.5.
Rob Dobson, Senior Economist at survey compilers Markit, stated; ‘The latest survey provides further evidence of the ongoing slowdown in the UK manufacturing sector, with output and new order growth easing to their second-weakest rates during the past year-and-a half. Despite this end of year tapering, the sector still performed well over 2014 as a whole, with growth averaging at its highest since 2010.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Strengthen
Given that there is a complete absence of domestic data to provoke changes, the Euro to Pound Sterling exchange rate is likely to continue trending higher on Friday.
The Euro to Pound Sterling exchange rate climbed to a high today of 0.7814.