The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a fresh seven year high of 1.3810.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trading in the region of 1.378
Earlier in the session, the Pound made gains against the Euro, as investors remained jittery ahead of Thursday’s European Central Bank policy meeting and continuing concerns over the Greek bailout deal.
As the day progressed, Sterling gave up some of its gains as economic data out of the Eurozone came in positively and the latest UK Services PMI came in below expectations.
According to research group Markit, its services PMI ticked lower from January’s figure of 57.2 to 56.7 in February. Economists had been forecasting for the index to rise to 57.5.
‘The slight deterioration in February’s CIPS/Markit report on services is a bit of a disappointment, but hardly a disaster. Contrary to expectations of a rise, the headline business activity index dipped. However, this reversed only part of the previous months rise and left the index still consistent with decent quarterly growth of services output of just below 1%. The drop looks likely to be temporary, given that new business, business expectations and employment indices all rose,’ said Vicky Redwood, chief economist at Capital Economics.
Eurozone Shows Signs of Improvement
The Euro clawed back some of its earlier losses as PMI data out of the 19-member currency bloc raised hopes that the region is finally starting to improve.
Markit’s composite PMI for the Eurozone, which measures both services and manufacturing activity, suggests the fastest economic growth in seven months last month. The composite PMI increased to a reading of 53.7 in February, up from the 52.7 recorded in the preceding month.
Also released on Wednesday was Eurozone Retail Sales data. On an annual basis sales across the currency bloc increased by 3.7%, beating expectations for 1.77%. On a month-on-month basis sales increased by 1.1%, smashing the -026% decline forecast.
The Euro remains under pressure due to confusion regarding the Greek situation. Earlier in the week Spain’s economy minister said that Eurozone members were discussing a third bailout for Greece, however this was denied by EU officials.
European Central Bank (ECB) and Bank of England (BoE) Meetings in Focus
The Euro is forecast to weaken further on Thursday as the ECB is expected to outline its €1.1 trillion quantitative easing programme. The launch of the programme will weaken the Euro; a move that is hoped will boost exports and growth across the region.
The Bank of England is expected to leave interest rate on hold at 0.5%.