Newsflash: UK Services PMI Declines, Pound Pressured
On Wednesday the Pound came under pressure as the UK’s Services PMI printed below expected levels.
Although economists had expected the measure of the UK services sector to ease from 59.5 to 59.2 in May, it actually tumbled to 56.5.
After the data was published Sterling softened against the majority of its currency counterparts.
The British Retail Consortium’s Shop Price Index had disappointed earlier in the day by holding at -1.9% on the year rather than improving to -1.8% and a Nationwide report revealed a marked slowing in house prices.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3711
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5279
Newsflash: Greek Talks Continue, UK Construction Sector Grows
Monday’s less-than-impressive UK Manufacturing PMI and the news that high-profile Eurozone officials are attempting to drive the Greek bailout negotiations forward saw the Pound Sterling to Euro (GBP/EUR) exchange rate fall to 1.38.
The pairing held declines even as the level of joblessness in Germany was shown to have fallen by slightly less-than-expected and the UK’s Construction PMI smashed forecasts for a reading of 55.0 by printing at 55.9.
It would take a subpar inflation figure for the Eurozone or concerning news from Greece for the Pound to return to trending in the 1.39/1.40 region today.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3888
Newsflash: Manufacturing Growth Slows, Pound/Euro Exchange Rate Trims Gains
Although the Pound Sterling to Euro (GBP/EUR) exchange rate remained up 0.4% on the day’s opening levels, Sterling moved away from the 1.40 level as the UK’s Manufacturing PMI fell short of forecasts.
The manufacturing index had been forecast to print at 52.5 in May, but it actually came in at 52.0.
April’s figure was also negatively revised to 51.8.
Markit economist Rob Dobson said of the result; ‘Where growth is being reported by manufacturers, this remains heavily dependent on the domestic market, and consumer demand in particular. The challenge therefore remains for the new government to take the necessary steps to revive manufacturing, boost investment spending and improve export competitiveness if any headway is to be made on achieving the long promised rebalancing of the UK economy.’
Germany’s inflation report showed an increase in consumer price gains but had competitively little impact on GBP/EUR trading.
Tomorrow’s Eurozone Consumer Price Index may prove more influential.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3972
Ahead of the release of the UK’s Markit Manufacturing PMI, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3984 – but healthy expansion in the manufacturing sector could help the Pound advance beyond 1.40.
UK Manufacturing PMI Forecast to Print at 52.5: Stronger Score Could Boost Pound Sterling to Euro (GBP/EUR) Exchange Rate
A notable lack of progress in the negotiations between Greece and its creditors over the weekend lent the GBP/EUR pairing some support and the Pound Sterling to Euro (GBP/EUR) exchange rate could climb during the European session if the UK’s Markit Manufacturing PMI shows the improvement expected.
Economists have forecast that the gauge of manufacturing rose from 51.9 in April to 52.5 in May on a seasonally adjusted basis.
If the index actually moved further away from the 50 mark separating growth from contraction it would support the theory that UK growth rebounded in the second quarter following fairly dismal quarter-on-quarter expansion of 0.3% in the first three months of the year.
A score above 52.5 would therefore be Pound-positive.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a low of 1.3943
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – Final Manufacturing PMI for Eurozone, France and Germany Impacts Trading, German Inflation Data Ahead
Mixed final manufacturing PMI’s for the Eurozone and its largest economies failed to have much impact on the GBP/EUR exchange rate on Monday.
While the figures for France and Italy were positively revised, Germany’s gauge was downgraded and the index for the currency bloc as a whole was cut from a flash reading of 52.3 to 52.2.
Markit economist Chris Williamson said of the Eurozone reading; ‘the rate of growth is modest rather than spectacular, however, and there are clearly countries which continue to struggle. Weakness is centred in the region’s core, with France’s manufacturing sector still in decline and Germany only seeing very meagre growth.’
Later today Germany is due to publish its Consumer Price Index for May.
Economists have forecast that the rate of inflation in the Eurozone’s largest economy increased 0.1% on the month, following stagnation in April.
This would result in the year-on-year Consumer Price Index increasing from 0.5% to 0.7%.
As higher inflation would indicate that the Eurozone’s quantitative easing measures are having the desired effect, the Euro to Pound Sterling (EUR/GBP) exchange rate could gain if the data prints in line with expectations.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7170.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: UK Construction/Services PMI, BoE Inflation Report and Potential Greek Default to Influence Trading this Week
Over the next few days we could see considerable Pound Sterling to Euro (GBP/EUR) exchange rate movement as both the UK and Eurozone publish significant ecostats and Greece’s June 5th repayment deadline approaches.
Of the UK reports the ones most likely to influence the direction taken by the GBP/EUR pairing include the UK’s Construction and Services PMIs. As the UK’s services sector accounts for over 70% of total growth, that report will be of particular interest. As it stands the measure is believed to have slipped from 59.5 to 59.2 in May.
The Bank of England’s (BoE) inflation report will also be a major driver of GBP/EUR exchange rate volatility at the tail end of the week.
Any hawkish comments from BoE policymakers on the subjects of inflation or interest rates would bolster demand for Sterling.
Meanwhile, the GBP/EUR pairing is likely to maintain a neutral-positive bias as we approach the deadline for Greece making its next payment to the International Monetary Fund (IMF).
If Greece defaults on June 5th, which is probable given the work that still needs to be done before an agreement can be reached, we are likely to see the Euro fall against most of its rivals.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7148 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3984