GBP/EUR Exchange Rate on Bullish Run following Stronger-than-Forecast UK Manufacturing PMI
After the UK Manufacturing PMI printed decidedly higher than forecast, at 55.5 rather than 51.3, demand for the Pound (GBP) rose sharply yesterday. However, as economists cautioned that this abrupt turnaround would likely not be sustained in the rest of the quarter, the GBP/EUR exchange rate saw trade slowing somewhat in the afternoon. Ahead of this morning’s UK Construction PMI the pairing is on a relatively narrow trend in the region of 1.4008.
Despite the dovish commentary of European Central Bank (ECB) President Mario Draghi, the GBP/EUR exchange rate is on a downtrend today, following an unexpected rise in the latest German Manufacturing PMI.
Eurozone Inflation Steadied as Domestic Unemployment hit Three-Year Low, GBP/EUR Exchange Rate Advanced in spite of Bearish Pound
Ahead of the weekend investors were reassured by the Eurozone’s Consumer Price Index printing at 0.0%, confirming that the currency union escaped the threat of negative inflation in October. German Retail Sales likewise proved somewhat bullish, showing strong growth of 3.4% in spite of falling a little short of forecast, while the Eurozone Unemployment Rate unexpectedly slipped to 10.8%, achieving a three-year low. This raft of positive data did help to shore up demand for the common currency (EUR) during the European session on Friday, however, the Pound Sterling to Euro (GBP/EUR) exchange rate nevertheless saw a limited rally towards the end of the day to end the week in the region of 1.4019.
Euro Currency News: EUR Dominant as German, Italian Manufacturing PMIs Strengthen Today
On Saturday European Central Bank (ECB) President Mario Draghi reiterated that policymakers were prepared to introduce fresh stimulus measures in the near future, stoking speculation that there will be a shift in policy at the central bank’s December meeting. With traders relatively encouraged by the prospect of further monetary loosening this helped to put the common currency back on an uptrend against rivals today, ahead of the finalised October Eurozone PMIs. As both the Italian and German manufacturing sectors were shown to have advanced on the earlier provisional readings sentiment was shored up further, easing persistent slowdown fears.
As the UK’s corresponding manufacturing data is expected to show a slight drop in expansion on the month the Pound (GBP) has been trending relatively cautiously this morning. Following last week’s disappointing national GDP report, which demonstrated that economic growth had slowed further than anticipated in the third quarter, the outlook of Sterling is remaining relatively muted.
GBP/EUR Exchange Rate Forecast: Volatility Expected on UK PMIs
Further PMI figures will be published later in the week for both the Eurozone and UK, although data for the Eurozone is likely to trigger less volatility for the pairing due to its being somewhat less fresh. Should the UK’s Services PMI show a decided expansion, as expected, then the GBP/EUR exchange rate could rally strongly on Wednesday. A shortfall here, however, will continue to erode the appeal of the Pound ahead of the week’s pivotal Bank of England (BoE) Rate Decision and accompanying meeting minutes.
Current GBP, EUR Exchange Rates
At time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was on a downtrend in the range of 1.4005, while the Euro to Pound Sterling (EUR/GBP) pairing climbed in the region of 0.7140.